Global Trade & Finance Today - Volume of trade in goods/services and financial transactions far surpasses any previous Period in human history - Explosion of cross-border economic interaction in the past few decades - Major international organizations have had to craft the laws and practices around this Activity, while also facilitating and encouraging its growth Key Functions of the WTO - 162 member states, formed from GATT in 1995. Each country gets one vote. - Provides settings in which countries negotiate trade agreements with goal of eliminating Tariffs and non-tariff barriers to trade - WTO members agree to grant each other most favored nation - Dispute settlement mechanism a setting in which trade disputes between member nations Can be heard and resolutions reached. Key Functions of IMF - 188 countries, founded in 1944 with currency-based mission, votes apportioned by share of Global economy - Provides short-term infusions of money to countries experiencing currency crisis. Paid back. With interest on a rapid timetable - Currency crisis: When serious doubt exists as to whether a country’s central bank has Sufficient foreign exchange reserves to maintain the country’s fixed exchange rate. - Conditionally: Loans made conditional upon changes in domestic policy Why are these organizations so controversial?
- In negotiations, world’s most wealthy economies have significantly more power than lesser Developed countries. - Negotiations tend to be secretive and critics have accused such organizations of ignoring Issues like the environment, women’s rights, worker’s rights, right of indigenous peoples - Conditionally of IMF lending can lead to very sudden and painful cuts in core aspects of Domestic policy: public pensions, education, social services, health care, etc. - Viewed critically as violating the sovereignty of nations to make domestic policy absent Outside intervention