International Institutions

1. INTERNATIONAL INSTITUTIONS
PRESENTED BY
SIMRAN KAUR
MBA 2ND YEAR
IGICM

2. UNCTAD
• United Nations Conference on Trade and Development
• 194 states are members
• Established in 1964 as a permanent intergovernmental body of UNO assembly
• Responsible for dealing with developmental issues particularly international trade, the main driver of
development
• UNCTAD Secretriat : Geneva Secretriat headed by Mukhisa Kituyi from Kenya
• Meets every 4 years
• 11 conferences have been held up to 2004
• Aim to help take informed decision and promote macro-economic policies best suitable to ending global
economic inequalities

3. ROLE OF UNCTAD
• Globalization and development
• Provide technical assistance on the management of public debt
• Promote integrated approach to trade, environment and sustainable development
• Focus on contribution of commodity sector to development, advocating diversification and risk
management
• Inform policy makers about the structure and evolution of FDI in the world
• Participate in setting international accounting standards
• Focus on issue related to international investment agreements

4. FUNCTIONS OF UNCTAD
• To promote international trade with a view to accelerating economic development
• To formulate principles of and policies on international trade and related problems of economic
development
• To negotiate multinational trade agreements
• To make proposals for putting its principles and policies into effect

5. PRINCIPLES OF UNCTAD
• Every country has the sovereign right freely to dispose of its natural resources in the interest of
economic development and freely to trade with other countries
• Economic relations including trade relations shall be based on the respect for the principles of sovereign
equality of states, self determination of people, and non-interference in internal affairs of other
countries
• There shall be no discrimination on the basis of differences in socio-economic systems

6. INTERNATIONAL MONETARY FUND(IMF)
• Established on December 27, 1945 with 29 countries
• Began financial operations on March 1, 1947
• Central institution of international monetary system
• Aims to prevent crises in the system by encouraging countries to adopt sound economic policies
• 187 countries on September 30, 2010

7. PURPOSES OF IMF
• Promote international monetary cooperation through a permanent institution
• Facilitate expansion and balanced growth of international trade
• Promote exchange stability
• Assist in establishment of multilateral system of payments
• Monitors economic and financial developments and policies
• Provides the governments and central banks of its member countries with technical assistance and
training in its area of expertise

8. VISION OF IMF
• Strive to promote sustained non-inflationary economic growth that benefits all people
• Be the centre of competence for the stability of the international financial system
• Focus on its core macroeconomic and financial areas of responsibility
• Be an open institution, learning from experience and dialogue

9. ORGANIZATION OF IMF
• Board of Governors, all member countries are represented, highest authority : meets once a year
• Executive Board – 24 Executive Directors with Managing Director as Chairman : meets three times a
week in Washington DC
• 5 largest shareholders : United States, Japan, Germany, France and United Kingdom – along with China,
Russia, Saudi Arabia, have their own seats on the Board
• Other 16 Executive Directors elected for 2-year terms by group of countries known as constituencies
• Key policy issues considered twice-yearly in International Monetary and Financial Committee (IMFC)
• Committee of Board of Governors of IMF and World Bank called Development Committee advises on
development policy
• IMF has weighted voting system

10. PROCESS OF IMF LENDING
• IMF loans are provided under an “arrangement”
• All arrangements are based on economic programmes and must be approved by Executive Board
through a “letter of intent”
• Loans are then released in phased installments as the programme is carried out
• Low-income countries may borrow at a concessional interest rate through Poverty Reduction and
Growth Facility (PRGF)
• Non-concessional loans are provided through five facilities : Stand-By Arrangements (SBA), Extended
Fund Facility (EFF), Supplemental Reserve Facility (SRF), Contingent Credit Lines (CCL), Compensatory
Financing Facility (CFF)
• Rate of charge is currently about 2.9%

11. IMF FACILITIES
• Poverty Reduction and Growth Facility (PRGF)
 Interest rate : 0.5%
 Repaid over period of 5.5-10 years
• Stand-By Arrangements (SBA)
 Short-term balance of payment problems
 Length: 12-18 months
 Repayment: 2.25-4years
• Extended Fund Facility (EFF)
 Established in 1974
 Repayment : 4.5-7 years

12. IMF FACILITIES
• Supplemental Reserve Facility (SRF)
 Introduced in 1997
 Surcharge : 3-5%
 Repayment : 1-1.5 years
• Contingent Credit Lines (CCL)
 Established in 1999
 Repayment :1-1.5 years
 Surcharge : 1.5-3.5%
• Compensatory Financing Facility (CFF)
 Established in 1960s
 No surcharge
 Same as SBA

13. IBRD
• International Bank for Reconstruction and Development
• International financial institution
• Offers loans to middle-income developing countries
• Established in 1944
• Main lending organization of the World Bank Group
• Headquarters at Washington, D.C.

14. ORGANIZATIONAL STRUCTURE OF IBRD
• President
• Board of Governors
• Board of Executive Directors
• Board Committee
• Development Committee

15. FUNCTIONS OF IRBD
• To assist in the reconstructions and development of territories of its member countries by facilitating
the investment of capital for productive purpose
• To promote private foreign investment by means of guarantees or participations in loans and other
investment made by private investors
• To arrange the loans made or guaranteed by it in relation to international loans through other channels
so that more useful and urgent small and large projects are dealt with first
• To promote the long ranged balanced growth of international trade and maintenance of equilibrium in
the balance of payments of member countries

16. FUNDING STRATEGY OF IBRD
• Ensure the availability of funds to the Bank
• Minimise the effective cost of those funds to its borrowers
• Control volatility in net income and over all loan charges
• Provide an appropriate degree of maturity transformation between its borrowing and lending

17. WORLD TRADE ORGANIZATION (WTO)
• Only global international organization dealing with the rules of trade between nations
• Formed on 1 January 1995
• Headquarter : Central William, Geneva, Switzerland
• Members : 167 nations
• India joined on 1 January, 1995
• Older form : GATT (General Agreement of Tarriffs and Trade)
• Official language : English, French, Spanish
• Current Director General : Roberto Azeuedo

18. PRINCIPLES OF WTO
• Non-discrimination
• Freer trade, predictable policies, encouraging competition
• Extra provisions for less developed countries
• Achieve further liberalization gradually through negotiation

19. FUNCTIONS OF WTO
• Administering the WTO trade agreements
• Monitoring national trade policies
• Providing technical assistance and training for developing countries
• Administering mechanism for settling trade disputes
• Cooperating with other international organizations like IMF and IBRD
• Providing the forum for negotiations among its members concerning their multilateral trade relations

20. BENEFITS OF WTO
• Achievements in reducing the tariff and non-tariff barriers to trade
• Liberalization of investments has been fostering economic growth of a number of countries
• Increase in competition, efficiency of resource utilization, improvement in quality and productivity and
fall in prices and acceleration of economic development
• Provides forum for multilateral discussion of economic relations
• Mechanism to deal with violation of trade agreements
• Considerable research related to global trade and disseminates a wealth of information

21. DRAWBACKS OF WTO
• Negotiations and decision making dominated by the developed countries
• Many developing countries don’t have the financial and knowledge resources to effectively participate
in WTO discussions and negotiations
• The developing countries have been getting a raw deal from WTO
• WTO has not been successful in imposing organization’s disciplines on the developed countries
• Because of dependence of developing countries on developed countries, developed countries are able
to resort to arms-twisting tactics

22. ORGANIZATION STRUCTURE OF WTO
• Top level decision-making body is the Ministerial Conference which meets at least once every two years
• General Council : ambassadors and heads of delegations in Geneva which meets several times a year
• General Council also meets as Trade Policy Review Body and Dispute Settlement Body
• Goods Council, Services Council and Intellectual Property (TRIPs) Council report to General Council
• Numerous specialized committees, working groups and working parties deal with individual agreements
• All WTO members may participate in all councils, committees, etc except Appellate Body, Dispute
Settlement panels, Textiles Monitoring Body and plurilateral committees

23. PROCESS OF SETTLING A DISPUTE BY WTO
• 60 days: Consultations, meditation, etc
• 45 days: Panel set up and panelists appointment
• 6 months: Final panel report to parties
• 3 weeks: Final panel report to WTO members
• 60 days: Dispute Settlement Body adopts report (if no appeal)
• 60-90 days: Appeals report
• 30 days: Dispute Settlement Body adopts appeals report

24. ECONOMIC INTEGRATION
• Type of arrangement that removes artificial trade barriers between integrating economies
• Balassa drew distinction between integration and cooperation
• Abolition of discrimination within an area

25. DEGREES OF ECONOMIC INTEGRATION
• Free trade area
• Customs union
• Common market
• Economic union
• Economic integration

26. EUROPEAN UNION (EU)
• Most successful of regional economic integration schemes
• Originally comprised 6 countries, namely, Belgium, France, Federal Republic of Germany, Italy,
Luxembourg and Netherlands
• Brought on January 1, 1958 by virtue of Treaty of Rome, 1957
• Expanded in 1973 with inclusion of UK, Denmark and Ireland
• Greek joined in 1981
• Spain and Portugal in 1986
• Abolished tariffs on trade among themselves
• Largest market in the world
• Boost competitiveness of European industry against its rivals particularly USA, SAARC, Japan

27. BARRIERS TO EU
• Border control
• Limitations on movement of people and their right to establishment
• Differing internal taxation regimes
• Lack of a common legal framework for business
• Controls on movement of capital
• Heavy-and differing- regulation of services
• Divergent product regulations and standards
• Protectionist public procurement policies

28. BENEFITS OF EU
• Uniform policy and regulatory environment of Union and reduction in transaction costs
• Expansion of markets
• Availability of new ports reducing transportation costs
• Removal of quota restrictions for textiles and clothing will reduce protection presently available to
Acs(accession countries) exports in EU market
• Harmonization of tariff structures will increase import duty of some countries above pre-accession level
and reduce those of others

29. CHALLENGES OF EU
• Many Indian products will have to face stiffer competition in EU market
• Low labour costs give rise to competition
• As Acs are labour abundant and low income countries, it could affect BPO by EU to India
• Acs may affect FDI inflow to India
• Exports of textiles may be adversely affected with low cost production in Central and Eastern European
Countries(CEECs) eating into India’s EU(15) markets

30. INDO-EU TRADE
• EU is India’s largest trading partner
• India’s exports to EU grew from Rs.282 crore in 1970-71 to Rs.1447 crore in 1980-81 and Rs.8951 crore
in 1990-91. Correspondingly, imports were Rs.320 crore, Rs.2639 crore andRs.12,680 crore
• Within EU, largest trade partners of India have been UK, Germany, Belgium, France
• Exports include textiles, jute, leather, polished diamonds, chemicals, engineering goods, etc
• Imports include edible oils, dairy products, capital goods, optical instruments, synthetic rubber, etc
• India should pay sufficient attention in order to take advantage of “enlarging opportunity”

31. ENLARGED EU & INDIA
• Accession of 10 new members
• Exports were insignificant and imports were lower than exports
• Main exports include gems and jewellery, drugs and pharmaceuticals, leather, textiles, plastics and
agricultural commodities

32. NAFTA
• Signed between USA and Canada in 1988, enlarged by inclusion of Mexico in 1994
• Eliminate all tariffs on products moving among three countries and end other barriers to services and
investment capital within North America

33. AREAS OF NAFTA
• Market access
• Trade rules
• Services
• Investment
• Intellectual property
• Dispute settlement

34. ADVANTAGES OF NAFTA
• Reduced Tariffs
• The Three Countries Take Advantage Of Real Income Increases
• Increased Of Trade Between, Canada, Mexico and the United States
• Provided More Employment Opportunities for the US Workers

35. DISADVANTAGES OF NAFTA
• Less Benefits To Mexican Workers Than Expected
• Increased Tariffs Yet Not Regulations

36. ASEAN
• Association of South East Asian Nations
• Formed by Bangkok Declaration,1967
• 5 countries viz Indonesia, Malaysia, Philippines, Singapore and Thailand
• Brunei joined in 1984
• Economic growth rate has been very high
• Important producer of coffee, sugar, timber, petroleum, nickel, bauxite, tungsten and charcoal
• ASEAN Free Trade Area(AFTA) created in 1992 which calls for elimination of all custom duties
• ASEAN-India summit held in November 2002
• Free Trade Agreement was signed between ASEAN and India in 2009

37. SAARC
• South Asian Association for Regional Cooperation
• Seven countries: India, Bangladesh, Pakistan, Nepal, Bhutan, Sri Lanka, Maldives
• Formally launched in December, 1985
• Secretriat of Association: Kathmandu, Nepal
• Fundamental goal: accelerate economic and social development through optimum utilization of their
human and material resources

38. OBJECTIVES OF SAARC
• To promote welfare of people of South Asia
• To accelerate economic growth, social progress and cultural development in the group
• To promote and strengthen collective self-reliance among countries of South Asia
• To contribute to mutual trust, understanding and appreciation of each other’s problems
• To strengthen cooperation with other developing countries
• To strengthen cooperation among themselves in international forums
• To cooperate with international and regional organizations with similar aims and purposes
• To promote active collaboration and mutual assistance in economic, social, cultural, technical and
scientific fields

39. PRINCIPLES OF SAARC
• Cooperation should be based on respect for principles of sovereign equality, territorial integrity, political
independence, non-interference in the internal affairs of other States and mutual benefits
• Such cooperation shall not be a substitute for bilateral cooperation but shall complement them
• Such cooperation shall not be inconsistent with bilateral and multilateral obligations

40. ADVANTAGES OF SAARC
• Greater cultural co-operation
• Promoted global objective of shelter for all
• SAFTA : a Free Trade Agreement confined to goods reduced custom duties to zero
• Provided forum for bilateral and regional agreements to the small poor nations for collaboration among
themselves for development

41. LIMITATIONS OF SAARC
• Domination of India
• Political differences
• Inequality among members
• Excludes bilateral and contentious issues discussion on forum
• No progress in road and rail connectivity which is obstacle for trade
• Lack of financial resources and technology
• Most of the countries are poor except for India and lack full fledged democratic structure

42. ECONOMIC INTEGRATION OF BUSINESS
• Provides opportunity for free trade with other countries that are at similar levels of development
• Presents a way to trade with advanced countries without being harmed by their superior economic
power
• Generate economic growth and development

43. THANK YOU!!!