Unit 5: International Institutions

International Institutions

World Trade Organization (WTO)

Objectives

• Promote free and fair international trade.
• Reduce trade barriers like tariffs, quotas.
• Provide a platform for trade negotiations.
• Ensure trade flows smoothly, predictably, and freely.

Functions

• Administers WTO trade agreements.
• Settles trade disputes between member countries.
• Monitors global trade policies through Trade Policy Review.
• Offers technical assistance and training to developing countries.
• Cooperates with other international institutions (IMF, World Bank).

International Monetary Fund (IMF)

Objectives

• Promote international monetary cooperation.
• Ensure exchange rate stability.
• Facilitate balanced growth of international trade.
• Reduce poverty and promote global financial stability.

Functions

• Provides financial assistance (loans) to member countries facing balance of payment problems.
• Offers policy advice and economic surveillance.
• Promotes exchange rate stability and prevents currency crises.
• Provides technical assistance and training for capacity building.
• Maintains the global pool of foreign exchange reserves (SDRs - Special Drawing Rights).

International Bank for Reconstruction and Development (IBRD)

Objectives

• Reduce poverty in middle-income and credit-worthy low-income countries.
• Promote sustainable development.
• Assist in reconstruction and development (originally post-WWII, now broader).

Functions

• Provides long-term loans at low interest for infrastructure, education, health, etc.
• Offers technical expertise and knowledge-sharing for development projects.
• Mobilizes financial resources for development.
• Encourages private sector investment in developing countries.

United Nations Conference on Trade and Development (UNCTAD)

Objectives

• Integrate developing countries into the global economy fairly.
• Promote trade and development, especially in poor nations.
• Reduce poverty through trade-led growth.

Functions

• Conducts research and policy analysis on trade, investment, and development.
• Provides a forum for intergovernmental dialogue and consensus building.
• Offers technical assistance to developing countries.
• Helps developing nations participate effectively in the global trading system.
• Promotes sustainable development through trade policies.

Summary Table

Regional Economic Integration

Regional Economic Integration refers to agreements among countries in a specific region to reduce or eliminate trade barriers and coordinate economic policies to promote free trade and economic cooperation.

Purpose

• Increase economic efficiency.
• Foster economic growth.
• Enhance political and economic relations among member countries.

Examples of Regional Integration Groups

• EU (European Union)
• NAFTA/USMCA (North America)
• ASEAN (Southeast Asia)
• SAARC (South Asia)
• MERCOSUR (South America)
• AfCFTA (Africa)

Levels of Economic Integration

Benefits of Regional Integration

• Trade creation (increase in intra-regional trade).
• Larger market access for producers.
• Attracts investment.
• Enhances competitiveness.
• Promotes political stability and cooperation.

Challenges

• Loss of national sovereignty.
• Uneven distribution of benefits.
• Conflicts over policy harmonization.
• Adjustment costs for local industries.
• European Union (EU)

Objectives

• Promote economic and political integration among European countries.
• Establish a common currency (Euro) and single market.
• Ensure free movement of goods, services, people, and capital.
• Promote peace, stability, and prosperity in Europe.

Functions

• Operates a single market with no trade barriers among member countries.
• Implements common policies on trade, agriculture, environment, and competition.
• Conducts common foreign and security policy.
• Provides development aid and humanitarian assistance globally.
• Enforces EU laws through institutions like the European Commission and Court of Justice.

NAFTA (Now USMCA – United States-Mexico-Canada Agreement)

Objectives

• Eliminate trade barriers between the US, Canada, and Mexico.
• Promote fair competition and increase investment opportunities.
• Protect intellectual property rights.
• Create a framework for resolving trade disputes.

Functions

• Removes tariffs and quotas on most goods traded among member nations.
• Facilitates cross-border movement of goods and services.
• Provides guidelines on labor and environmental standards.
• Ensures protection for investors and intellectual property.
• Monitors and resolves trade-related disputes.

Association of Southeast Asian Nations (ASEAN)

Objectives

• Accelerate economic growth, social progress, and cultural development in Southeast Asia.
• Promote regional peace and stability.
• Foster economic and political cooperation among member countries.
• Enhance collaboration in education, technology, and environment.

Functions

• Facilitates free trade among ASEAN members through the ASEAN Free Trade Area (AFTA).
• Promotes joint initiatives in tourism, energy, and agriculture.
• Works with global partners through ASEAN+3 (China, Japan, South Korea) and others.
• Coordinates regional disaster management and response.
• Organizes annual summits and ministerial meetings for policy coordination.

South Asian Association for Regional Cooperation (SAARC)

Objectives

• Promote welfare and improve the quality of life of people in South Asia.
• Strengthen economic, social, and cultural cooperation among member nations.
• Accelerate economic growth and regional integration.
• Encourage collaboration on mutual concerns like health, education, and environment.

Functions

• Implements regional projects in areas like agriculture, health, and energy.
• Facilitates trade among South Asian countries (SAFTA – South Asian Free Trade Area).
• Promotes people-to-people contact and cultural exchange.
• Coordinates on climate change, disaster management, and poverty alleviation.
• Holds regular summits to discuss regional issues and cooperation.

BRICS (Brazil, Russia, India, China, South Africa)

Objectives

• Promote peace, security, and development in member countries and globally.
• Reform global financial institutions (like IMF, World Bank) to reflect emerging economies.
• Enhance economic cooperation and sustainable development.
• Encourage mutual investment, trade, and innovation.

Functions

• Holds annual BRICS Summits for political and economic dialogue.
• Operates the New Development Bank (NDB) for funding infrastructure and sustainable projects.
• Cooperates in areas like science, technology, education, and health.
• Coordinates positions on global issues in forums like the UN.
• Promotes use of local currencies in trade to reduce dependence on the US dollar.

Summary Table