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Two multilateral institutions dealing with trade

A brief overview of UNCTAD and the WTO

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Structure of the Presentation

The origins of the two organisations

The mandates of the organisations

How the two organisations function

Their respective ideas on development

Some more detail about institutional aspects of UNCTAD

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Origins of the WTO Keynes’ ideas on post-war international economic governance (avoid

economic conflicts): The Bretton Woods agreements (1944) – Finance for

development (WB), monetary and macroeconomic stability (IMF), but not

trade (GATT negotiations started in 1945)

1947 - two agreements concluded dealing with trade:

1) the United Nations Conference on Trade and Employment (50

countries) sought to establish the ITO (adoption of the Havana Charter

– ambitious scope); and,

2) the GATT – agreed 1947 (23 countries), implemented 1948 (provisional

legal instrument)

GATT the only multilateral instrument governing trade until 1994 – birth of

the WTO

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Historical Context of UNCTAD Decolonisation – new countries mainly from Africa and Asia enter the

international system (primarily the UN). No institution seen to represent their

interests

North-South and East-West tensions: ideological differences between capitalist

west and socialist east. Newly created decolonised South and former colonial

powers in the North.

Global governance, Southern initiatives: Non-Aligned Movement (1955) and

Group of 77 (founded at UNCTAD – now 133 members)

The force of personality: Raul Prebisch, first SG of UNCTAD. “Trade not aid”: link

between trade and development (Prebisch thinking: declining terms of trade

between primary commodity exporters – developing countries - and manufactured

goods exporters – developed countries)

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MandatesWTO

Rules-based organisation, sets binding

multilateral trade law through negotiations

(“legislative” role)

Dispute settlement mechanism with mandatory

decisions, can apply sanctions (“judicial” role)

Monitors national policies – Trade Policy

Review Mechanism. Every 4 + years (“executive

role”)

Work confined to the existing trade agreements

and to the scope of the negotiations

= narrow mandate based on existing trade

rules

UNCTAD

Research on a range of trade and

development issues

Consensus-building through debates and

exchange of experiences among 192 member

States on all UNCTAD issues

Technical cooperation on all topics of

UNCTAD’s work (policy and legal advice,

training, institution building, support to

negotiations)

= wide mandate working on the integrated

treatment of trade, investment and other

related issues (dealing with issues left out of

the ITO and the GATT)

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FunctioningWTO

Permanent secretariat in Geneva

(Ministerial Meetings). No links with the UN

machinery

Ongoing negotiations in rounds

The Secretariat provides neutral technical

support to the negotiations

Accession has to be negotiated (currently

153 members – Cape Verde latest member)

Limited role of non-governmental

stakeholders

UNCTAD

UNCTAD intergovernmental machinery (Ministerial

Conferences and Trade and Development Board)

linked to UN General Assembly and ECOSOC

UNCTAD secretariat part of the UN Secretariat (part

of same budget)

No normative role, no negotiations of binding

rules, only political role

UN membership (192 countries – Montenegro latest

member)

Strong participation of non-governmental

stakeholders

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Ideas on DevelopmentWTO

Main goal is not development per se, but to

avoid commercial disputes and promote a)

trade liberalisation and b) multilateralism

as a public good. Trade liberalisation and

implementation of trade rules leads to

development

Same trade rules and reciprocity apply to

all, but…

…Special and differential treatment is

introduced with various intensities

The “Doha Development Agenda”

introduced in 2001

UNCTAD

Trade is one of the instruments leading to

development…

…but no automatic links between trade

liberalisation, growth, poverty reduction

and development: the links are

multidimensional

Special and differential treatment is key,

e.g. GSP 1968; International Commodities

Agreements; attention given to LDCs and

increase in aid; South-South cooperation

(GSTP), regional integration.

No “one size-fits-all” development models

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Some numbers UNCTAD secretariat: 400 staff (WTO 800)

Annual Regular budget: US $ 57 million

Extra-budgetary funds: US$ 34 million (2007)

Technical Assistance programs – different from the Bank: no loans or credit. Over

300 projects.

Collaboration with other agencies, including WTO, ITC, UN regional Commissions,

other UN agencies, e.g. UNDP, FAO, as well as with civil society, private sector etc.

(No UNCTAD field offices)

6 Flagship reports:

Trade and Development Report

World Investment Report

Least Developed Countries Report

Information Economy Report

Africa Report

Review of Maritime Transport …plus many more publications…

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UNCTAD Today Economic conditions change, new areas for research emerge, new

economic issues become urgent:

1960s and 70s: commodity prices, recognition of SDT in the GATT, and

TC

1980s: debt crisis, critique of WC (tight fiscal and monetary policies,

trade and financial liberalisation) and post-WC (macroeconomic

stablisation, social spending, good governance), trade efficiency

(trade facilitation)

1990s: investment flows (WIR), financial crisis, trade and environment,

“positive agenda” in multilateral negotiations

UNCTAD’s mandate has changed accordingly: UNCTAD XII, 2008 - wider

mandate (work on issues such as migration, climate change, commodities

and food security and the emergence of the ‘new south’)

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Thank You

Joseph ClementsEconomic Affairs Officer

UNCTAD

http://www.unctad.org

Joseph.Clements@unctad.orgTel. + 41 22 91 75724

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1. “U]nhampered trade dovetailed with peace; high tariffs, trade barriers, and unfair economic competition, with war…if we could get a freer flow of trade…freer in the sense of fewer discriminations and obstructions…so that one country would not be deadly jealous of another and the living standards of all countries might rise, thereby eliminating the economic dissatisfaction that breeds war, we might have a reasonable chance of lasting peace.” Cordell Hull, US. Sec. of State 1933 – 44

2. “Trade has become the lens through which development is perceived, rather than the other way round” Dani Rodrik, Harvard Economist

3. “Financial markets have for some time had an independent capacity to destabilize developing countries; there are now increasing indications of the vulnerability of all countries to financial crisis. […] Overall, there appears to be a need for more collective control and guidance over international finance. ” (Trade and Development Report 1990).