INTERNATIONAL ECONOMIC AND TRADE INSTITUTIONS

UNIT I
1. United Nations Organization (UNO)
2. Economic and Social Council: Composition, functions and poers
!. "ultilateral #n$estment %uarantee &genc'
UNIT II
1. #nternational Centre for Settlement of #n$estment (isputes (#CS#()
2. )ilateral in$estment protection agreements
!. #"*
UNIT III
1. UNC+&(: composition, functions and poers
2. OEC(: composition, functions and poers
!. UNC#+,&-: composition, functions and poers
UNIT IV
1. #),&: composition, functions and poers
2. #*C: composition, functions and poers
!. EU: composition, functions and poers
.. UN#+&,: composition, functions and poers
INTERNATIONAL ECONOMIC AND TRADE INSTITUTIONS
UNIT I
UNITED NATIONS ORGANIZATION (UNO)
History. +/e e0istence of -eague of Nations (-N) did not pre$ent t/e out1rea2 of ars
or t/e in$asion of one countr' 1' anot/er. Creation of a ne international organization
/ic/ is 1etter t/an t/e -N for pre$enting t/e loss of propert' and li$es and for
esta1lis/ing felt necessar', 1ased on t/e e0perience of t/e Second 3orld 3ar. +/e
folloing efforts ere made for t/e esta1lis/ment of a ne international organization
namel' t/e United Nations Organization (UNO).
+/ere are some important stages in t/e esta1lis/ment of t/e UNO, as follo:
1. London Declrtion (4ul' 12, 15.1). (elegates from fourteen friendl' countries
including t/e U6, *rance, t/e USS,, and t/e US& met in 4ames 7alace (-ondon) in
4une 12, 15.1 and e0pressed t/eir is/ to or2 it/ ot/er independent nations for
1uilding a orld /ere t/ere is no place for aggression.
2. Atlntic C!rter (&ugust 1., 15.1). 3inston C/urc/ill (7" of t/e U6) and *.(.
,oose$elt (7resident of t/e US&) met in t/e Nort/ &tlantic on 1oard of a s/ip in t/e
&tlantic Ocean and signed a c/arter announcing t/eir intention to create a ne
3orld Organization to esta1lis/ international peace and 8ustice and to stand up
against aggression.
!. "s!in#ton Con$erence (4anuar' 1, 15.2). (elegates from 29 nations assem1led
in 3as/ington and e0pressed t/eir consent for t/e general principles in t/e &tlantic
C/arter t/roug/ t/e United Nation (eclaration. +/e' pledged t/at t/e' ould not
enter in to an' agreement it/ %erman' and 4apan after ar.
.. T!e Cs%lnc Con$erence (4anuar' 1.:2., 15.!). +/is conference too2 place in
t/e cit' of Casa1lanca. 3inston C/urc/ill, *.(. ,oose$elt and t/e *renc/ delegates
discussed t/e peace efforts after ar.
;. Mosco& Con$erence (Octo1er !<, 15.!). +/e foreign minister of t/e US&, t/e
USS,, t/e U6 and C/ina met in "osco and signed a declaration called t/e United
Nations (eclaration /ic/ affirmed t/e necessit' of esta1lis/ing at t/e earliest
practica1le date a general international organization 1ased on t/e principles of t/e
so$ereign e=ualit' of all peace lo$ing states, and opened t/e mem1ers/ip 1' all
suc/ states, large and small, for t/e maintenance of peace and securit'.
9. D'(%rton O)s Declrtion (&ugust 21 > Octo1er ?, 15..).delegates of t/e US&,
t/e USS,, t/e U6 and C/ina met in (um1arton Oa2s near t/e cit' of 3as/ington
(C and t/e ma8or allied poers decided on t/e 1road structure of t/e ne 3orld
Organization and drafted a roug/ cop' of t/e constitution of t/e UNO. +/e draft
constitution as sent to ot/er 22 countries for t/eir opinion. #t is as ell as called t/e
conference for t/e origin of t/e esta1lis/ment of t/e UNO.
?. *lt Con$erence (*e1ruar' 11, 15.;). 3inston C/urc/ill, *.(. ,oose$elt and Stalin
(7" of t/e USS,) met in @alta (,ussia) during t/e closing t/e stages of t/e Second
3orld 3ar. #t as primaril' concerned it/ t/e pro1lems of t/e post ar settlement,
1ut as t/e UN as to 1e an important part of t/e post:ar settlement. @alta
Conference discussed t/e formation of t/e UNO and $eto in t/e Securit' Council.
A. +'dicil Con$erence (&pril 15.;). +/e Conference of 4ustice /eld in 3as/ington
and as attended 1' 8ustices from .. nations. +/e' formulated t/e Code of t/e
#nternational Court of 4ustice.
5. Sn ,rncisco Con$erence (&pril 2; 15.;). +/e United Nations Conference on
#nternational Organization as con$ened in San *rancisco it/ delegations from .9
states present. -ater on, some ot/er delegations ere also in$ited. &t t/e ;
t/
plenar'
session of t/e conference in &pril !<, it adopted a report outlining t/e permanent
organization of t/e conference. +/e conference as organized into . general
committees, . commissions and 12 tec/nical committees. +/e conference is of great
/istoric importance /ic/ C/arter of t/e United Nations Organization as adopted in
4une 2;, 15.; as ;< states signed on t/e pream1le of t/e UNO C/arter. +/e UNO
came into e0istence on Octo1er 2., 15.; after ratification of man' countries.
+/e UN C/arter contains 111 articles and is di$ided into 29 c/apters. +/e UN /as 9
principal organs, specialized agencies and ot/er su1sidiar' organs /ic/ ma' 1e
created of t/e principal organs for t/e realization of t/eir different tas2s.
O%-ecti.es. +/e o18ecti$es of t/e UN are ens/rined in t/e pream1le to t/e C/arter.
+/ere are . ma8or o18ecti$es:
1. +o sa$e t/e succeeding generations from t/e scourge of arB
2. +o reaffirm fait/ in fundamental /uman rig/ts, in t/e or2 and dignit' of /uman
person and e=ual rig/ts of men, omen and nation large and smallB
!. +o esta1lis/ conditions under /ic/ 8ustice and respect from t/e o1ligations
arising from treaties and ot/er sources of international la can 1e maintainedB
.. +o promote social progress and 1etter standard of life in larger freedom.
/'r0oses. +/e purposes of t/e UN are set fort/ in &rticle 1 of t/e UN C/arter /ic/ can
1e mentioned 1elo:
1. "aintenance of international peace and securit'B
2. (e$elopment of friendl' relations among nationsB
!. #nternational cooperation in sol$ing pro1lem of economic, social, cultural and
/umanitarian natureB promotion and encouragement of respect for /uman rig/ts
and fundamental freedomsB
.. +o 1e a centre for /armonizing t/e action of nations to ac/ie$e a1o$e ends.
/rinci0les. +/e UNO acts in accordance it/ t/e folloing principles as en$isaged in
&rticle 2 of t/e UN C/arter, in order to fulfill t/e purposes for /ic/ t/e UN as
esta1lis/ed:
1. +/e organization is 1ased on t/e principles of t/e so$ereign e=ualit' of all its
mem1ersB
2. &ll mem1ers s/all fulfill in good fait/ t/e o1ligation t/e' /a$e assumed under t/e
C/arterB
!. +/e' s/all settle t/eir international dispute 1' peaceful meansB
.. +/e' s/all refrain in t/eir international relations from t/e t/reat or use of force in
an' manner inconsistent it/ t/e purposes of t/e UNB
;. +/e' s/all gi$e t/e UN e$er' assistance it/ t/e C/arter, and to refrain from
gi$ing assistance to an' state against /ic/ /e organization is ta2ing pre$enti$e
or enforcement actionB
9. +/e UN is to ensure t/at non:mem1er act in accordance it/ t/ese principles so
far as is necessar' for maintaining international peace and solidarit'B
?. +/e organization s/all not inter$ene in matters essentiall' it/in t/e domestic
8urisdiction of an' state. +/is pro$ision s/all not, /oe$er, pre8udice t/e
application of enforcement action it/ respect to t/reats to t/e peace, 1reac/es
of t/e peace and acts of aggression.
Me(%ers!i0. +/ere are to 2inds of mem1ers/ip, $iz., original and ne. &ccording to
&rticle ! of t/e UN C/arter, t/e original mem1ers of t/e UN s/all 1e t/e states /ic/
/a$ing participated in t/e UN Conference on #nternational Organization in San
*rancisco, or /a$ing pre$iousl' signed t/e (eclaration 1' t/e UN of 4anuar' 1, 15.2,
sign t/e present c/arter and ratif' it in accordance it/ &rticle 11<.
&rticle . of t/e UN C/arter states t/at mem1ers/ip in t/e UN is open to all ot/er peace:
lo$ing state (1eside ;1 signatories) /ic/ accept t/e o1ligations contained in t/e present
c/arter and in t/e 8udgment of t/e organization, are a1le and illing to carr' out t/ese
o1ligations. +/e admission of an' suc/ state to mem1ers/ip in t/e UN ill 1e affected
1' a decision of t/e %eneral &ssem1l' upon t/e recommendation of t/e Securit'
Council.
/rinci0l Or#ns. +/ere are 9 principal organs of t/e UN, $iz., (1) %eneral &ssem1l'B
(2) Securit' CouncilB (!) Economic and Social CouncilB (.) +rustees/ip CouncilB (;)
SecretariatB and (9) #nternational Court of 4ustice.
ECONOMIC AND SOCIAL COUNCIL (ECOSOC)
/'r0oses. &rticle ;; states t/at it/ t/e $ie of t/e creation of conditions of sta1ilit'
and ell 1eing /ic/ are necessar' for peaceful and friendl' relations among nations
1ased on respect for t/e principle of e=ual rig/ts and self determination of people, t/e
UN s/all promote:
1. Cig/er standard of li$ing, full emplo'ment, and conditions of economic and social
progress and de$elopmentB
2. Solutions of international economic social /ealt/ and related pro1lems and
international cultural and educational cooperationB
!. Uni$ersal respect for, and o1ser$ance of, /uman rig/ts and fundamental
freedoms for all it/out distinction as to race, se0, language or religion.
Co(0osition. &rticle 91 states t/at ECOSOC at present consists of ;. mem1ers
(originall' 1A /ic/ as su1se=uentl' raised to 2?) of t/e UN elected 1' t/e %& for a
term of ! 'ears. One:t/ird of t/e mem1ers of t/e ECOSOC are replaced e$er' 'ear. &
retiring mem1er is eligi1le for immediate re:election. Eac/ mem1er of t/e council /as
one representati$e. No criteria /a$e 1een laid don 1' t/e %& regarding t/e
=ualification, etc. for election of mem1er of ECOSOC.
ECOSOC ma' ta2e suita1le arrangements for consultation it/ non:go$ernmental
organizations /ic/ are concerned it/ matters it/in its competence. Suc/
arrangements ma' 1e made it/ international organization and, /ere appropriate it/
national organizations after consultation it/ t/e mem1ers of t/e UN.
ECOSOC generall' meets tice a 'ear. #t s/all adopt its on rules of procedure.
Coe$er, /en necessar', special sessions can 1e con$ened. &ll t/e decisions are
ta2en 1' t/e Council it/ ma8orit' $ote. ECOSOC carries out its or2 smoot/l' it/
functional commissions namel':
1
(a) +ransport and Communication CommissionB
(1) Statistical CommissionB
(c) *iscal CommissionB
(d) 7opulation CommissionB
(e) Social (e$elopment CommissionB
(f) Cuman ,ig/ts CommissionB
(g) Narcotic (rugs CommissionB
(/) #nternational Commodit' +rade Commission.
ECOSOC *unctional Commissions as su1sidiar' 1odies as follo:
2
1. Commission on Crime 7re$ention and Criminal 4usticeB
2. Commission on Narcotic (rugsB
!. Commission on Science and +ec/nolog' (e$elopmentB
.. Commission for Social (e$elopmentB
;. Commission on t/e Status of 3omenB
9. Commission on Sustaina1le (e$elopmentB
?. Statistical CommissionB
A. United Nations *orum on *orests.
ECOSOC /as fi$e regional commissions namel':
(a) +/e Economic Commission for Europe (ECE)B
(1) +/e Economic Commission for &sia and *ar EastB
(c) +/e Economic Commission for -atin &merica (EC-&)B
(d) +/e Economic Commission for &frica (EC&)B
(e) +/e Economic Commission for &merica.
,'nctions nd /o&ers. *unctions and poers of ECOSOC can 1e mentioned 1elo:
1. ECOSOC ma' ta2e or initiate studies and reports it/ respect to international
economic, social, cultural, educational, /ealt/ and related matters and ma' ma2e
recommendations it/ respect to an' suc/ matters to t/e %&, to t/e mem1ers of
t/e UN and to specialized agencies concerned (&rticle 92 pr. 1).
2. #t ma' ma2e recommendations for t/e purpose of promoting respect for and
o1ser$ance of, /uman rig/ts and fundamental freedoms for all (&rt. 92 pr. 2).
1
"'neni, p. !;
2
ECOSOC *unctional Commissions D/ttp:EE.canadainternational.gc.caEprmn':
mponuEcanadaFun:canadaFonuEo$er$ie:sur$olEECOSOCEfunctional:tec/ni=ues.asp0GlangHengI
accessed on 2! &pril 2<1..
!. #t ma' prepare draft con$entions for su1mission to t/e %& it/ respect to matters
falling it/in its competence. (&rt. 92 pr. !).
.. #t ma' call, in accordance it/ t/e rules prescri1ed 1' t/e UN international
conferences on matters it/in its competence. (&rt. 92 pr. .).
;. #t ma' enter into agreements it/ t/e $arious specialized agencies esta1lis/ed
it/ t/e UN defining t/e terms on /ic/ t/e agencies concerned s/all 1e 1roug/t
into relations/ip it/ t/e UN. Suc/ agreements s/all 1e su18ect to appro$al 1'
t/e %&. (&rt. 9! pr. 2).
9. #t ma' coordinate t/e acti$ities of t/e specialized agencies t/roug/ consultation
it/ and recommendations to suc/ agencies and t/roug/ recommendation to t/e
%& and to t/e mem1ers of t/e UN. (&rt. 9! pr. 2).
?. #t ma' ta2e appropriate steps to o1tain regular reports from t/e specialized
agencies. #t ma' ma2e arrangements it/ t/e mem1ers of t/e UN and it/ t/e
specialized agencies to o1tain reports on t/e steps ta2en to gi$e effect to its on
recommendations and to recommendations on matters falling it/in its
competence made 1' t/e %&. (&rt.9. pr. 1). #t ma' communicate its o1ser$ations
on t/e reports to t/e %&. (art. 9. pr. 2).
A. #t ma' furnis/ information to t/e SC and s/all assist t/e SC upon its re=uest.
(&rt. 9;).
5. #t s/all perform suc/ functions as fall it/in its competence in connection it/ t/e
carr'ing out of t/e recommendations of t/e %&. #t ma', it/ t/e appro$al of t/e
%&, perform ser$ices at /e re=uest of t/e UN and at t/e re=uest of specialized
&gencies. (&rt. 99).
MULTILATERAL INVESTMENT GUARANTEE AGENC*
"#%& is an international financial institution /ic/ offers political ris2 insurance
guarantees. Suc/ guarantees /elp in$estors protect *(# against political and non:
commercial ris2s in de$eloping countries. "#%& is a mem1er of t/e 3orld )an2 %roup
and is /ead=uartered in 3as/ington, (.C., United States, esta1lis/ed 1' t/e 3) in
15AA aimed at encouraging foreign in$estment in de$eloping countries 1' issuing
guarantees against non:commercial ris2s. #t offers an in$estment insurance facilit' to
encourage confident in$estment in de$eloping countries.
"#%&Js stated mission is Kto promote *(# into de$eloping countries to support economic
grot/, reduce po$ert', and impro$e peopleJs li$esK. +/e agenc' focuses on mem1er
countries of t/e #nternational (e$elopment &ssociation and countries affected 1' armed
conflict. #t targets pro8ects t/at endea$or to create ne 8o1s, de$elop infrastructure,
generate ne ta0 re$enues, and ta2e ad$antage of natural resources t/roug/
sustaina1le policies and programs.
+/e mem1ers/ip is open to all 3) mem1ers. Current mem1ers/ip is 1A<, $iz., 1;; from
de$eloping countries and 2; from industrialized countries.
!
"#%& pro$ides guarantee to
in$estors against t/e ris2 of transfer restriction (including incon$erti1ilit'), e0propriation,
ar and ci$il distur1ance and 1reac/ of contract.
3
MIGA Member Countries (180), at [http://wwwmi!aor!/whoweare/in"e#$%m&sti"'1(8)*,
a$$esse" on 23 Apri+ 201,
%enerall' in$estors from mem1er countr', ot/er t/an t/e /ost countr' (t/e countr'
/ere t/e in$estment is made) are eligi1le for guarantees. Coe$er, "#%& ma' insure
an in$estment made 1' a national of a /ost countr' if t/e funds to 1e in$ested come
from outside t/e countr' and t/e application of co$erage is made 8ointl' 1' t/e in$estor
and /ost countr'. "#%& also insures in$estments made 1' State:oned enterprises if
t/e' operate on a commercial 1asis. +/e guarantee is a$aila1le for periods up to 1;
'ears and occasionall' up to 2< 'ears. +/e guarantee co$erage re=uires in$estors to
ad/ere to social and en$ironmental standards t/at are considered to 1e t/e orldLs 1est.
"#%& is oned and go$erned 1' its mem1er states, 1ut /as its on e0ecuti$e
leaders/ip and staff /ic/ carr' out its dail' operations. #ts s/are/olders are mem1er
go$ernments /ic/ pro$ide paid:in capital and /a$e t/e rig/t to $ote on its matters. #t
insures long:term de1t and e=uit' in$estments as ell as ot/er assets and contracts it/
long:term periods. +/e agenc' is assessed 1' an independent e$aluator eac/ 'ear. #ts
2<11 e$aluation recommended t/at it utilize its recentl' e0panded in$esting capacit' and
closel' monitor pro8ectsJ profita1ilit' to 1etter understand t/eir impacts on its financial
performance. "#%&Js total in$estments amounted to M1.1 1illion in 2<11. #t issued M2.1
1illion ort/ of ne in$estment guarantees in 2<11 and /eld M1.; 1illion in total assets.
Since, inception, "#%& /as issued more t/an ;<< guarantees for pro8ects in ?A
de$eloping countries. &s of 4une 2<<1, total co$erage issued e0ceeds US (ollars 5
1illion.
CONVENTION ON THE SETTLEMENT O, INVESTMENT DIS/UTES
+/e con$ention on t/e Settlement of #n$estment (isputes 1eteen States and Nationals
of ot/er States dran up 1' t/e #),( in 159;, /a$ing aims at /armonizing t/e to
principles 1' setting up a neutral ar1itral mac/iner' recognized as a necessar' ad8unct
of international trade. #t a$oed intent is to pro$ide a fair and 1inding facilit' for
ar1itration of in$estment disputes 1eteen contracting states and nationals of ot/er
states.
Under t/e con$ention, t/e parties must consent in riting to t/e 8urisdiction of t/e
con$entionLs Settlement Centre. Once, consent is gi$en neit/er part' can it/dra
unilaterall'. 3/ile t/is impinges on t/e so$ereignt' of t/e /ost state, t/e con$ention
furt/er pro$ides most significantl', t/at t/e /ost state is o1liged to compl' it/ an aard
rendered under t/e con$ention. &rticle ;. of t/e con$ention states t/at t/e aard is
1inding upon and it must 1e enforced 1' mem1er states as if it as a final 8udgment of a
court of t/at state.
+/e con$ention stri$es to a$oid t/e 1ug1ear of recognition of foreign ar1itral aards for
purposes of e0ecution 1' creating /at /as come to 1e 2non as a supernatural aard,
automaticall' enforcea1le in t/e territories of all mem1er states. &rticle ;. of t/e
con$ention sol$es t/is pro1lem 1' re=uiring mem1er states to enforce an' ar1itral aard
certified 1' t/e Settlement CentresL Secretar':%eneral as final and 1inding and to
enforce it, as if it as a court 8udgment of t/eir states.
UNIT II
INTERNATIONAL CENTRE ,OR SETTLEMENT O, INVESTMENT DIS/UTES
Under t/e Con$ention for t/e Settlement of #n$estment (isputes 1eteen States and t/e
National of ot/er States (159;), #CS#( as esta1lis/ed in 159;. #t as sponsored 1' t/e
#),( and came into force in 1599. #t is intended to settle t/e in$estment disputes to
encourage pri$ate foreign in$estment. #t consists, inter alia, of a plenar' &dministrati$e
Council and its C/airman is t/e C/airman of t/e #),(. #t also /as a %eneral &ssem1l'.
#CS#( pro$ides mac/iner' and procedure for t/e settlement of in$estment disputes. #n
respect of in$estment dispute at t/e international le$el, t/e person ma2ing pri$ate
in$estment dispute 1ecome a part' to t/e in$estment disputes. +/us, along it/ states
indi$iduals are directl' parties to t/e dispute.
+/e 1asis of 8urisdiction of t/e #CS#( is consensual /ic/ is eit/er ritten in t/e contract
or /ic/ consent ma' 1e gi$en /en t/e dispute arises. +/ere also e0ists separate
panels of conciliators nominated 1' t/e parties. +/e conciliators act in t/eir personal
capacit' or on t/e 1asis of 8urisdiction.
+/e ma8or re=uirement in order for t/e #CS#( to /a$e 8urisdiction o$er a dispute is t/at
one of t/e parties s/ould 1e a stateB and it is important to note t/at t/e 8urisdiction ill
e0tend to state entities onl' if t/e rele$ant state /as notified #CS#( t/at, for t/e purposes
of t/e con$ention, t/e particular state entit' is deemed to /a$e t/e same identit' as t/e
state. Under t/e terms of t/e con$ention, mem1er states agree to respect and compl'
it/ aards as if t/e' ere 8udgments of t/eir on courts.
+/e settlement procedure is initiated 1' ma2ing a re=uest in riting to t/e Secretar':
%eneral. +/e re=uest of t/e part' s/ould 1e clear /et/er /e ants settlement t/roug/
conciliation or ar1itration. +/e parties are free to select eit/er conciliation or ar1itration.
+/e num1er of ar1itrators or conciliators s/ould 1e in odd num1er. Once t/e tri1unal or
commission is esta1lis/ed, it or2s as per t/e rules of #CS#(.
+/e recommendations of t/e conciliation commission are not 1inding /ereas t/e aard
of t/e &r1itration +ri1unal is 1inding on parties and is enforcea1le li2e a 8udicial decision
in t/e states of parties to contract.
+/e grounds for setting an aard are un8ust constitution, 1e'ond or e0ceeding poer,
corruption, different from t/e 1asic rule of procedure not to gi$e reason or failure to gi$e
reason.
&s per &rticle 9. of t/e con$ention, matters of interpretations of aards gi$en 1' t/e
&r1itration tri1unal can 1e referred to t/e #nternational Court of 4ustice, 1ut t/e $alidit' of
an aard cannot 1e c/allenged in t/e #C4.
1ILATERAL INVESTMENT /ROTECTION AGREEMENTS
INTERNATIONAL MONETAR* ,UND (IM,)
#n 4ul' 15.., representati$es of .. nations at )retton 3oods, Ne Camps/ire, US&
signed an agreement to esta1lis/ t/e #nternational )an2 of ,econstruction and
(e$elopment (#),() and t/e #nternational "onetar' *und (#"*). #"* as esta1lis/ed
on 2?
t/
(ecem1er 15.;, /en representati$es of countries /ose =uotas amounted to
A<N of t/e *undLs resources /ad deposited 1' ratif'ing of t/e )retton 3oods
&greement.
O%-ecti.es. +/e &rticles of &greement of t/e #"* set out t/e folloing as t/e o18ecti$es
of t/e #"*:
1. +o promote international monetar' cooperation t/roug/ a permanent institution
/ic/ pro$ides t/e mac/iner' for consultation and colla1oration on international
monetar' pro1lemsB
2. +o facilitate t/e e0pansion and 1alanced grot/ of international trade and to
contri1ute t/ere1' to t/e promotion and maintenance of /ig/ le$els of
emplo'ment and real income and to t/e de$elopment of t/e producti$e resources
of all mem1ers as primar' o18ecti$es of economic polic'B
!. +o promote e0c/ange sta1ilit', maintain orderl' e0c/ange arrangements among
mem1ers and to a$oid competiti$e e0c/ange depreciationB
.. +o assist in t/e esta1lis/ment of a multilateral s'stem of pa'ment it/ respect to
current transactions 1eteen mem1ers and in elimination of foreign e0c/ange
restrictions /ic/ /amper t/e grot/ of orld tradeB
;. +o gi$e confidence to mem1ers 1' ma2ing t/e general resources of t/e #"*
temporaril' a$aila1le to t/em under ade=uate safeguards, t/us pro$iding t/em
it/ opportunit' to correct malad8ustments in t/eir 1alance of pa'ments it/out
restoring to measure destructi$e of national or international prosperit'B
9. +o s/orten t/e duration and lessen t/e degree of dise=uili1rium in t/e
international 1alance of pa'ments of mem1ers.
+o ac/ie$e its o18ecti$es, #"* /as a code of economic 1e/a$ior for its mem1ers. #"*
ma2es financing a$aila1le to mem1ers in 1alance of pa'ment difficulties and pro$ides
t/em it/ tec/nical assistance to impro$e t/eir economic management.
#"* maintains a large pool of financial resources t/at it ma2es a$aila1le to mem1er
countriesOtemporaril' and su18ect to conditionsOto ena1le t/em to carr' out programs
to remed' t/eir pa'ment deficit it/out sorting to restricti$e measures t/at ould
ad$ersel' affect national or international prosperit'.
#"* /elps mem1ers to coordinate t/eir economic policies internationall'. #n effect, it
pro$ides a permanent international monetar' forum. +/e focus of t/e #"* is not t/e onl'
on t/e pro1lems of indi$idual countries, 1ut also on t/e structure of t/e international
monetar' s'stem as on t/e de$elopment of policies and strategies t/roug/ /ic/ its
mem1ers ca or2 toget/er to ensure a sta1le orld financial s'stem and sustaina1le
economic grot/.
Str'ct're. +/e central office of t/e #"* is in 3as/ington. #t is an autonomous 1od' it/
151E1A. countries as mem1ers and is officiated to t/e UN. +/e /ig/est aut/orit' of t/e
#"* is t/e )oard of %o$ernors in /ic/ eac/ mem1er countr' is represented 1' a
go$ernor and an alternate go$ernor. +/e )oard of %o$ernor is t/e polic':ma2ing 1od'.
+/e tenure of t/e mem1ers of t/e )oard is fi$e 'ears. +/e )oard /olds, usuall', one
meeting in a 'ear. +/e mem1ers of t/e #"* /a$e not 1een accorded e=ual status. +/e
$otes /a$e 1een gi$en to t/e mem1ers according to t/e eig/tage of t/eir contri1ution.
+/e US& and t/e U6 en8o' a eig/tage of !! and 1. percent respecti$el'.
+/e #nternational "onetar' and *inancial Committee consists of 2. %o$ernors
representing constituencies or groups of countries, corresponding to t/ise of t/e
E0ecuti$e )oard. #t meets tice a 'ear, on t/e occasion of t/e #"*:3) &nnual and
Spring "eetings, to ad$ise t/e #"* on t/e functioning of t/e international monetar'
s'stem.
+/e administrati$e responsi1ilities and detailed functioning of t/e #"* are $ested it/
t/e e0ecuti$e )oard. &t present t/ere are 2. e0ecuti$e directorsOeig/t e0ecuti$e
directors represent indi$idual countries: C/ina, *rance, %erman', 4apan, ,ussia, Saudi
&ra1ia, t/e U6, and t/e US. +/e 19 ot/er e0ecuti$e directors eac/ represent groupings
of t/e remaining countries gi$ing due consideration to t/e geograp/ical representation.
+/e E0ecuti$e )oard rarel' ma2es its decisions on t/e 1asis of formal $oting, 1ut relies
instead on t/e formation of consensus among its mem1ers.
+/e e0ecuti$e directors /a$e su1stantial poers. (ecisions regarding lending c/anges
in e0c/ange rates and appointment of "anaging (irector are ta2en 1' t/e E0ecuti$e
(irectors. E0ecuti$e (irectors meet tice or t/rice a ee2 to decide on pro1lems t/at
crop up. +/e decision can 1e ta2en onl' 1' a four:fift/s ma8orit'. &ll of t/e E0ecuti$e
(irectors possess /ig/ standard tec/nical 2noledge in economics and finance and
speciall' foreign e0c/ange.
+/e "anaging (irector is t/e c/ief of t/e organization and en8o' a position identical to
t/e one en8o'ed 1' t/e Secretar' %eneral. +/e main responsi1ilit' for t/e proper
or2ing of t/e #"* mainl' rests it/ /im. Ce is also responsi1le for t/e appointment of
t/e staff of t/e #"*. Ce is elected 1' t/e E0ecuti$e (irectors. Ce is aso t/e e0:officio
C/airman of t/e )oard of (irectors.
Reso'rces. +/e resources of t/e #"* come from su1scriptions 1' mem1er countries,
1orroing and nel' created S(,s.
2'ots nd S'%scri0tions. E$er' mem1er of t/e #"* is re=uired to su1scri1e to t/e
#"* an amount e=ui$alent to its =uota. +/e #"*Ls s'stem of =uotas is one of its central
features. & mem1erLs =uota reflects its economic size in relation to t/e total mem1ers/ip
of t/e #"*. & mem1er is generall' re=uired to pa' a1out 2!N of its =uota in gold or 1<N
of t/e gold /oldings of t/e countr' /ic/e$er is less and t/e remaining in its on
currenc'. Puotas of al #"* mem1ers are re$ieed at inter$als of not more t/an ; 'ears.
Se$eral general increases /a$e 1een agreed in t/e part to 1ring #"* =uotas in line it/
t/e grot/ of t/e orld econom' and t/e need for additional international li=uidit'.
1orro&in#s. +/e #"* is aut/orized under its &rticles of &greement to supplement its
ordinar' resources 1' 1orroing. Under t/e %eneral &greement to )orro, ele$en
industrial countries /a$e underta2en to lend to t/e #"*. #"* /as also entered into
medium term and s/ort term 1orroing agreements to supplement its ordinar'
resources.
+/e #"* pro$ides financial assistance to lo:income countries t/roug/ concessional
lending under t/e 7o$ert' ,eduction and %rot/ *acilit' (7,%*) and de1t relief under
t/e Cea$il' #nde1ted 7oor Countries (C#7C) initiati$e. +/ese resources are financed
t/roug/ 1ilateral contri1utions and 1' t/e #"* itself. +/e' are separate from t/e =uota
su1scriptions and are administered under t/e 7,%* and 7,%EC#7C +rust, for /ic/
#"* acts as +rustee.
Utili3tion. *or t/e sa2e of con$enience, it/ t/e esta1lis/ment of S(,s, t/e accounts
of t/e #"* are 2ept into to sets, t/e %eneral &ccount and Special (raing &ccount.
+/e ordinar' transactions of t/e #"* relating to =uota su1scriptions, repurc/ases and
pa'ment of c/arges are conducted t/roug/ t/e %eneral &ccount.
E4c!n#e Contrct. Eac/ mem1er on 8oining #"* /as to declare t/e par $alues of its
currenc' in terms of gold or t/e US (ollars of t/e eig/t and fineness in effect on 1
st
4ul' 15... +/ese par $alues are adopted as t/e 1asis for t/e #"*Ls transactions.
"em1ers are pledged to cooperate it/ t/e #"* to promote e0c/ange sta1ilit' to
maintain orderl' e0c/ange arrangements and to a$oid competiti$e e0c/ange alterations.
+/e' are furt/er re=uired not o engage in discriminator' currenc' arrangements or
multiple currenc' practices.
Role o$ IM,. +/e #"* com1ines ! ma8or functions namel' regulator', financial and
consultati$e. #n its regulator' aspect, it acts as t/e guardian of a code set up 1' its
&rticles. #n its financial aspect, it functions as an agenc' it/ resources a$aila1le for
s/ort term to medium term loans to meet 1alance of pa'ments deficits of mem1er
countries. #n its consultati$e aspect, it pro$ides a centre for international cooperation and
a source of counsel and tec/nical assistance to its mem1ers.
+/e role of t/e #"* is mainl' tofold:
1. #t is an organization to monitor t/e proper conduct of t/e international monetar'
s'stem.
2. #t is a source of li=uidit' for countries in need of foreign e0c/ange to finance
temporar' 1alance for pa'ment deficits.
+/e #"* maintains a large pool of financial resources t/at it ma2es a$aila1le t/e
folloing operations to mem1er countries.
Dr&in# $ro( IM,. #"* pro$ides temporar' assistance to mem1ers to tide o$er
1alances of pa'ment deficits. 3/en t/e countr' re=uires foreign e0c/ange, it tends its
on currenc' to t/e #"* and gets t/e re=uired foreign e0c/ange. +/is is 2non as
QdraingL from t/e #"*. 3/en t/e 1alance of pa'ments position of t/e countr' impro$es,
it s/ould Qrepurc/aseL its currenc' from t/e #"* and repa' t/e foreign e0c/ange.
UNIT III
UNITED NATIONS CON,ERENCE ON TRADE AND DEELO/MENT (UNCTAD)
1c)#ro'nd. ECOSOC as /ardl' a1le to pro$ide t/e needed initiati$es and leaders/ip
due to t/e e0istence of OEE( (Organization for European Economic Cooperation) and
OEC( of t/e estern poer.
+/e de$eloped countries are for free trade /ic/ is a tool for glo1al e0ploitation. 3it/ t/e
emergence and increased participation of a large num1er of de$eloping countries and
mem1ers of t/e UN, t/ere as a groing focus on de$elopment pro1lems in UN 1odies
ad a demand for action t/e UN to set up #+O for 8ust trade. +/e UN appointed a
committee in 159! to consider /o 1est t/is could 1e done 1ecause t/e US Congress
as against for an' ne proposal for #+O. +/is UN committee recommended as a
possi1le alternati$e a $ia media. +/e UNC+&( as set up in 159. on t/e 1asis of
alternati$e.
*rom t/e $er' 1eginning UNC+&(Ls 1asic p/ilosop/' /as 1een one of t/e compromise
and cooperation, not one of confrontation, and conflictOto promote economic
de$elopment and trade t/roug/ international cooperation it/in t/e uni$ersal United
Nations frameor2. &t UNC+&(:# its first Secretar':%eneral (r. 7re1is/c/ set out t/is
p/ilosop/' of con$erging measures. +/e essential points of /is p/ilosop/' and t/esis
ma' 1e stated /ere.
UNC+&( /as principal aims as follo:
1. +o promote international trade and economic de$elopment of de$eloping
countriesB
2. +o promote trade and economic cooperation particularl' 1eteen countries at
different stages of economic de$elopment, 1eteen de$eloping countries and
1eteen countries it/ different economic and social s'stemsB
!. +o formulate principles and policies on international trade and de$elopment and
to facilitate t/e restructuring and adaptation of t/ose principles and rules and t/e
international institutions concernedB
.. +o promote a more a e=uita1le international economic order, a larger $oice for
de$eloping countries in decision:ma2ing, and a de$eloping dimension and
consensus in international institutions and policies.
Role nd E$$ecti.eness o$ t!e UNCTAD5 +/e %eneral &ssem1l' of t/e UN at its 19
t/
Session on 15
t/
(ecem1er 1591 t/roug/ its resolution 1?1< (RS#) designated t/e
present decade as United Nations (e$elopment (ecade, a period /ic/ mem1er states
and t/eir people ill intensif' t/eir effort to mo1ilize and sustain support for measures
re=uired on t/e part of 1ot/ de$eloped ad de$eloping countries to accelerate progress
toards self:sustaining grot/.
+/e goal of t/e de$elopment decade as t/at t/e less de$eloped countries, attain 1'
15?<, as minimum annual grot/ rate in aggregate national income of ;N and as its
principal assistance component, a foreign aid contri1ution of 1N of t/e %N7 of eac/ of
t/e de$eloped countries. On t/e same da', t/e %& also adopted resolution 1?<1 (RS#),
entitled T#nternational trade as a primar' instrument for economic de$elopmentU.
#n 4ul', 1592, t/e Cairo Conference on t/e 7ro1lems of Economic (e$elopment strongl'
recommended t/e earl' con$ening of an #nternational Conference on +rade and
(e$elopment under t/e aegis of t/e UN. +/e ECOSOC resol$ed, under its resolution
51? (RRR#S) of !
rd
&ugust 1592, to con$ene a UN Conference on +rade and
(e$elopment. +/e Council also esta1lis/ed a preparator' committee of e0perts.
,irst Con$erence (Gene.6 789:)5 +/e action of t/e %& and ECOSOC and t/e or2
done 1' t/e 7reparator' Committee, pa$ed t/e a' for t/e opening of t/e UNC+&( on
"arc/ 2!
rd
"arc/ 159. in %ene$a and t/e Conference completed its or2 on 19
t/
4une
159.. &mong t/e ma8or recommendations in t/is regard ere t/at t/e de$eloped
countries s/ould not erect 1arriers to t/e import of products of e0port interest of
de$eloping countries and t/at de$eloped countries s/ould progressi$el' reduce e0isting
1arriers to t/e flo of e0ports from de$eloping countries it/out insisting on reciprocal
concessions.
Second Con$erence (Ne& Del!i6 789;)5 #t soug/t to attain a T1road measure of
agreement on practical solutions to t/ose ma8or and urgent issues of trade and
de$elopment appearing in its agendaU. +/e principles of %eneralized S'stem of
7references as reac/ed /ic/ em1odied preferential of free entr' of manufactures and
semi:manufactures of de$eloping countries into t/e mar2ets of de$eloped countries as
adopted in t/e ,esolution 21 (11) of UNC+&(.
+/ird Conference (Santiago, C/ile 15?2). +/is session also considered similar matters in
regard to de$elopment pro1lems. ,ecommendations ere made for assistance to
orldLs least de$eloped countries. Some specific recommendations included t/ose
relating to assistance 1' de$eloped countries to less de$eloped countries in di$ersif'ing
t/eir economies, impro$ing s/ipping and port facilities to loer transport costs, and
promoting import and e0port trade of t/ese countries 1' loering foreign rates.
*ourt/ Conference (Nairo1i, 15?9). #t too2 a ma8or step toards a N#EO 1' adopting an
integrated program for commodities. +/e Conference agreed upon t/e strateg' to
e0pand and di$ersif' e0ports of manufactures and semi:manufactures of de$eloping
countries and upon measures to strengt/en t/e tec/nological capacit' of t/ose
countries. +/is Conference can 1e descri1ed as Ta success of sortsU. +/is produced t/e
ma8or results /ic/ it as /eld from ! "a' to !1 "a' 15?9:
1. Creation of a Common *und for 1uffer stoc2 financingB
2. Ensuring sta1le condition for commodit' trade and de$elopment of e0port
products from t/e de$eloping countriesB
!. %eneralized s'stem of preferences s/ould 1e impro$ed and its terms e0tended
1e'ond t/e originall' fi0ed period of 1< 'earsB
.. +/e least de$eloped and loc2ed and island de$eloping countries s/ould recei$e
/ig/ priorit' in assistanceB
;. #t as also agreed t/at t/e strengt/ening of t/e UNC+&( as essential to t/e
creation of impro$ed conditions for international trade and economic cooperation.
:::::::: Until E-ESEN+C CON*E,ENCE in 2<<.
A Re.ie& o$ t!e ,'nctionin# o$ UNCTAD5 %i$en t/e important role of primar'
commodities and natural resources in t/e e0ternal sectors of de$eloping countries, t/e
initial focus of UNC+&( as on commodit' polic' and efforts to sta1ilize and e0pand t/e
e0port earning of t/ese countries. #n t/e process, UNC+&( adopted a group approac/ o
negotiations li$ing up toget/er, t/e centrall' planned econom' of Central and Eastern
Europe and t/e So$iet Union plus a fe ot/er similar economics forming t/eir on
groups.
(espite t/e de1ates and disagreements o$er t/e 'ears, UNC+&( pla'ed a 2e' role in
t/e emergence of:
i. %eneralized S'stem of 7referencesB
ii. & "aritime S/ipping CodeB
iii. Code of ,estricti$e +rade 7racticesB
i$. Special #nternational 7rograms to /elp t/e -(CB
$. #nternational aid targets.
(uring t/e 15?<s, in time it/ t/e ma8or c/anges in t/e international economic
en$ironment, UNC+&( 1ecame a central forum for de1ate 1eteen t/e Nort/ and
Sout/. +/e negotiations 1ecame politicall' c/arged, most of its session during t/e 15?<s
and 15A<s reflected s/arp di$isions 1eteen participants. E$en as glo1al concerns
seem to 1e emerged in t/e 15A<s on t/e diagnosis for economic pro1lems, UNC+&( did
not appear to c/ange. @et, in UNC+&( S### t/e conference 1roug/t toget/er a $irtuall'
uni$ersal $ie t/at economic policies 1ased on mar2et forces ere t/e 1est 1asis for
ac/ie$ing de$elopment.
UNCTAD nd "TO. UNC+&( e$er since its inception in 159., /as /ad to struggle for
recognition as an institution for negotiating trading rules and principles, as ell as trade
polic' =uestions 1ecause t/e %&++, alread' e0isted since 1 4anuar' 15.A as
contractual frameor2 of rig/ts and o1ligations and /ad t/e full support of ma8or trading
countries.
+/ere are differences and often conflicts # regard to /ic/ ideologies and policies s/ould
go$ern international economic and trade relations. UNC+&( stresses t/e de$elopment
approac/, /ereas %&++E3+O /as 1een promoting a li1eral international trading
s'stem 1' remo$ing t/e tariff and non:tariff 1arriers in international trade.
Instit'tion. #t is a permanent organ of t/e UN esta1lis/ed 1' t/e %& ,esolution 155;
(R#R) of (ecem1er !<
t/
159.. +/is resolution defines t/e principal functions and
mem1ers/ip of UNC+&( and of its permanent organ, t/e +rade and (e$elopment
)oard, and /as set in motion and go$erning t/e acti$ities of t/e )oard and of t/e
su1sidiar' 1odies of t/e )oard, /ic/ /a$e 1een esta1lis/ed since t/e 159.
Conference. +/e conference /ic/ is a plenar' 1od' of a large num1er of countries
meets normall' e$er' four 'ears.
7rincipal functions of UNC+&( according t/e resolution a1o$e are:
a) +o promote international trade, especiall' it/ a $ie to accelerating economic
de$elopment and particularl' trade 1eteen countries at different stages of
de$elopment 1eteen de$eloping countries and 1eteen countries it/ different
s'stems of economic and social organization, ta2ing into account t/e functions
performed 1' e0isting international organizationB
1) +o formulate principles and policies on international trade and related pro1lems
of economic de$elopmentB
c) +o ma2e proposals for putting t/e said principles and policies into effect and to
ta2e suc/ ot/er steps it/in its competence as ma' 1e rele$ant to t/is and
/a$ing regard to differences in economic s'stems and stages of de$elopmentB
d) %enerall' to re$ie and facilitate t/e coordination of acti$ities of ot/er institutions
it/in t/e UN s'stem and in t/e field of international trade and related pro1lems
of economic de$elopment, and in t/is regard to cooperate it/ t/e %& and
ECOSOC it/ respect to performance of t/eir responsi1ilities for coordination
under t/e C/arter of t/e UNB
e) +o initiate action, /ere appropriate, in cooperation it/ t/e competent organs of
t/e UN for t/e multilateral legal instruments in t/e field of trade, it/ due regard
to t/e ade=uac' of e0isting organs of negotiation and it/out duplication of t/eir
acti$ities.
f) +o 1e a$aila1le as a centre of /armonizing t/e trade and related de$elopment
policies of %o$ernment and regional economic groupings in pursuance of &rticle
1 of t/e UN C/arterB
g) +o deal it/ an' ot/er matters it/in t/e scope of its competence.
OEC(: composition, functions and poers
UNC#+,&-: composition, functions and poers
UNIT IV
#),&: composition, functions and poers
#*C: composition, functions and poers
EU: composition, functions and poers
UN#+&,: composition, functions and poers