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Created in 1944, at the Bretton Woods

conference to prevent the kinds of chain
reaction in the economic system that
caused world currencies to collapse like
in
the Great Depression of the 1930s.


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þ mhe IMF in short:
þ IMF is a forum of national economic policies,
international monetary and financial systems, which
involves active dialogue with each member country
þ motal quotas of $312 billion; outstanding loans of
$71 billion to 82 countries ð

 

   
þ Five largest shareholders:
United States, Japan, Germany, France, United
Kingdom
þ China, Russia, and Saudi Arabia have their own
seats on the Board.
þ 16 other Executive Directors are elected for twoyear
terms by groups of countries, known as
´Constituenciesµ.

  
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urposes of IMF«.

þ romote international monetary cooperation,

exchange stability, and orderly exchange
arrangements
þ Foster economic growth and high levels of

employment
þ memporary financial assistance to countries to

help the balance of payments adjustments

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þ Monitoring economic and financial developments
and policies, in member countries and at the
global level, giving policy advice to its members
based on its more than fifty years of experience.
þ Lending to member countries with balance of
payments problems, supporting adjustment and
reform policies aimed at correcting the underlying
problems.
þ roviding the governments and central banks of
its member countries with technical assistance
and training in its areas of expertise.

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þ IMF looks at the performance of the economy as
a whole (macroeconomic performance¢
þ Focuses also on the financial sector policies
Ex: regulation and supervision of banks and other
financial institutions.
þ ays attention to structural policies that affect
macroeconomic performance.
Ex: labor market policies (affect employment and
wage behavior¢
 
 
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þ In September 2000, the IMF·s then managing
director Horst Koehler set out some major
priorities for the work of the IMF:
þ romoting sustained non-inflationary economic
growth
þ Being in the center of competence
þ Focusing on its core macroeconomic and
financial
areas of responsibility
þ Working in a complementary fashion with other
institutions established
þ Being an open institution
 
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þ IMF's main ressources: suscriptions (quotas¢
þ Countries pay 25 percent of their quota subscriptions in
Special Drawing Rights (SDRs¢ or major currencies
þ IMF can call on the remainder, payable in the member's
own currency, to be made available for lending as needed.
Quotas,
Determine the amount of financing that each country can
receive from the IMF Are the main determinant of countries'
voting power in the IMF.
-Broadly reflect members' relative size in the world economy
þ mhe United States of America, the world's largest
economy, contributes most to the IMF, 17.5 percent of
total quotas


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mhe IMF offers financial assistance:
mhree implemented facilities:
--Stand-by Agreement
--EFF (Extended Fund Facility
RGF (overty reduction and Growth Facility¢
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mhe IMF offers technical
assistance to transitional
economies:

mhe former Soviet Republics

South Korea in the 1997

financial crisis

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þ mhe structural adjustment is undemocratic and
inhumane:
þ Causing social problems
þ Foreign corporations and investors take
advantage of local cheap labor, but have no regard
for the environment
þ mhe gap between the rich and the poor is getting
bigger?
þ Example of Argentina
þ mhe IMF has become a tool of the USA?
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þ mhe widening trade gap between the developed
and developing countries, the general
dissatisfaction of the developing countries with the
GAmm and the need for a new organization for
international economics cooperation in the field of
trade and aid, designed to reduce the trade gap of
developing countries, encouraged the
establishment of the United Nations Conference
on trade and development(UNCmAD¢ in 1964 as a
permanent organ of the UN general Assembly.
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þ FUNCmIONS«
mhe principal functions of UNCmAD are..
1¢ mo promote international trade with a view to
accelerating economics development.
2¢ mo formulate principles of and policies on
international trade and related problems of
economics development.
3¢ mo negotiate multinational trade agreements.

4¢ mo negotiate multinational trade agreements.

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UNCmAD: 1964

X mhe context of North-South and East-West tensions

X mhe link between trade and development

X 1st UNCmAD Ministerial Conference in Geneva;

‡ ermanent secretariat established Research 2

 
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‡ Intergovernmental machinery linked to UN General
Assembly and ECOSOC
‡ Secretariat part of the UN Secretariat (part of same
budget¢
‡ Development-oriented and independent secretariat
‡ olitical role (´soft lawµ¢
‡ Automatic membership
‡ Wide participation of non-governmental stakeholders

 
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ù mhe Ministerial Conference (every 4 years¢, reports to

the UN General Assembly and ECOSOC
ù Executive body: the mrade and Development Board,
one high level annual session, reports to the UN
General Assembly and Ecosoc
ù mhree annual Commissions on:
ù mrade in goods and services, and commodities
ù Investment, technology and related financial issues

ù Enterprise, business facilitation and development

ù Several Expert Meetings on specific issues

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þ UNCmAD secretariat: 400 staff

þ Annual Regular budget: US $ 57 million
þ Extra--budgetary funds: US$ 35 million (2005¢
Extra
þ No field offices
GENERAL AGREEMENT ON TARIFFS AND TRADE
(GATT)

Was signed in 1947;

‡It is a multilateral trade agreement;

‡Regulating trade among about 150 countries;

‡According to its preamble, purpose of GAmm is ´substantial

reduction of tariffs and other trade barriers and elimination
of preferences, on a reciprocal and mutually advantageous
basisµ.
þ GAmm functioned  
 as an organization,
conducting eight rounds of talks addressing various
trade issues and resolving international trade
disputes.
þ mhe Uruguay Round, completed on December 15,
1993 after 7 yrs of negotiations, resulted in an
agreement among 117 countries (including U.S.¢ to
reduce trade barriers and to create more
comprehensive and enforceable world trade rules.
þ mhe Final Act embodying the results of Uruguay
Round, was signed in April 1994.
þ mhis agreement created the World mrade
Organization (WmO¢, which came into being on
January 1, 1995.
þ GAmm was the outcome of the failure of negotiating
governments to create the International mrade
Organization (ImO¢.

þ mhe Bretton Woods Conference (1944¢ had

introduced the idea for an organization to regulate
trade as part of a larger plan for economic recovery
after World War II. As governments negotiated the
ImO, 23 negotiating states began parallel
negotiations for the GAmm.

þ Once the ImO failed in 1950, only the GAmm

agreement was left.


can be divided into three phases:

þ the first phase, from 1947 until the morquay Round,

largely concerned with which all commodities
would be covered by the agreement and freezing
existing tariff levels.

þ the second phase, encompassing three rounds,

from 1959 to 1979, focused on reducing tariffs.

þ the third phase, consisting only of the Uruguay

Round from 1986 to 1994, extended the
agreement fully to new areas such as intellectual
property, services, capital, and agriculture. Out of
this round the WmO was born.
Rounds
GAmm held a total of 8 rounds:
þ Geneva Round - 1947 :mhe first round took place in
1947 in Geneva. 23 countries participated. mhe
main focus of the round was tariff concessions,
around 45,000 in total.
þ Annecy Round ² 1950 :mhe second round took
place in 1949 in Annecy, France. 13 countries
participated. mhe main focus of the talks was more
tariff reductions, around 5000 in total.
þ morquay Round ² 1951 :mhe third round occurred in
morquay, England in 1951. 38 countries
participated. 8,700 tariff concessions were made.
þ Geneva Round - 1955-1956 :mhe fourth round
returned to Geneva in 1955 and lasted until May
1956. 26 countries participated. $2.5 billion in
tariffs were eliminated or reduced.
þ Dillon Round - 1960-1962 :mhe fifth round
occurred once more in Geneva and lasted from
1960 to 1962. mhe talks were named after U.S.
mreasury Secretary and former Under Secretary of
State, Douglas Dillon, who first proposed the talks.
26 countries participated. Along with reducing over
$4.9 billion in tariffs, it also yielded discussion
relating to the creation of the European Economic
Community(EEC¢.
þ Kennedy Round - 1964-1967 :mhe sixth round was
the last to take place in Geneva from 1964 until
1967 and was named after the late US resident
Kennedy. 66 countries participated. Concessions
were made on $40 billion worth of tariffs.

þ mokyo Round - 1973-1979 :Reduced tariffs and

established new regulations aimed at controlling
the proliferation of non-tariff barriers and voluntary
export restrictions. 102 countries participated.
Concessions were made on $190 billion worth.
þ Uruguay Round - 1986-1993 :mhe Uruguay
Round began in 1986. 125 countries
participated. It was the most ambitious
round to date, hoping to expand the
competence of the GAmm to important new
areas such as services, capital, intellectual
property, textiles, and agriculture.
þ mhe Dunkel Draft mext or Dunkel ackage or
Dunkel Draft Act embodying the results of
Uruguay Round was released on 20th
December 1991.
þ mhe Uruguay Round concluded on 15th Dec
1993 and as many as 125 countries
including India signed the Final Act on April
15th 1994 at Marrakesh (Morocco¢.
þ mhus, the General Agreement on mariffs and
mrade (GAmm¢ also known as the Dunkel
Agreement, finally emerged as the World
mrade Organization (WmO¢ in 1995.
Why GAmm converted to WmO?
þ GAmm rules discriminated against developing
countries under the garb of clauses such as
´escape clausesµ, ´safeguard rulesµ,
´voluntary export restraintsµ, ´orderly
agreementsµ.
þ ¶Agriculture· was treated as a special case
thus escaping GAmm rules.
þ mhough developed countries removed
majority of tariff barriers yet some others still
remained affecting the interests of
developing countries.
þ US and EEC had concluded several bilateral,
discriminatory and restrictive arrangements
outside GAmm rules.
þ ´Safeguardsµ rules under GAmm undermined the
effective working of GAmm.
þ Customs union and free trade areas permitted
under GAmm had been distorted and abused.
þ mhough GAmm was a mandatory body, it lacked
enforcing mechanism.
þ Last but not the least, with the emergence of more
and more new developing countries, it was felt that
GAmm rules devised half a century ago had outlined
their utility.
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