Reform of the International Institutions

Reform of the International Institutions

The IMF, World Bank and the WTO

Peter Coffey and Robert J. Riley

The seemingly endless problems encountered by the IMF, WTO and World Bank provide major reasons for seeking reform. However, an additional impetus is the changing balance of economic power in the world. The volume begins with an overview of the Bretton Woods and international trading systems. Following this are discrete, in-depth discussions of the three institutions from American and European points of view. The authors emphasise the need for making the IMF and World Bank more regional in structure and, like the European Bank, more frugal in the lifestyles of their officials. Similarly, they call for a narrower focus in the mission of the World Bank and the IMF. In the case of the WTO, they call for a democratic reform of the organisation comprising participation by experts and, above all, better representation and support for Third World countries.

Chapter 4: The World Trade Organisation

Peter Coffey and Robert J. Riley

Subjects: economics and finance, international economics

Extract

Peter Coffey THE BACKGROUND Rarely in the history of the world has a new international organisation caused such animosity and agitation as has the World Trade Organisation (WTO). Created in 1995, it is the natural but rather different successor to the old GATT. Like its predecessor, it is responsible for organising ‘rounds’ of international trade negotiations and for the administration of a number of treaties.1 Unlike its predecessor, the decisions of the WTO are binding. Its decisions can be appealed via its so-called ‘Appellate Body’, and the decisions of this institution are final and binding. As was widely reported in even the least business, economic and trademinded newspapers, the attempts to launch a new round of trade talks, in Seattle, in 1999, were a glorious failure. But, as will be noted in the next part of this chapter, the writing was already clearly legible on the proverbial wall, well before Seattle. THE ORGANISATIONAL FRAMEWORK FOR THE WTO AND ITS RELATIVE SHORTCOMINGS The major difference between the GATT and the WTO has already been noted. Put succinctly, a member state failing to obtain satisfaction vis-à-vis another member state following a complaint may take retributive action against that state. A similarity, however, between the GATT and the WTO (the old article 24 of the GATT) is the possibility of creating regional trade groupings such as customs unions. Here, as before, members may request compensation for possible trade losses. The USA has done this vis-à-vis the EU on at least two...

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