Two multilateral institutions dealing with trade A brief overview of UNCTAD and the WTO

1. Two multilateral institutions dealing with trade A brief overview of UNCTAD and the WTO

2. 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

3. 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: • the United Nations Conference on Trade and Employment (50 countries) sought to establish the ITO (adoption of the Havana Charter – ambitious scope); and, • the GATT – agreed 1947 (23 countries), implemented 1948 (provisional legal instrument) • GATT the only multilateral instrument governing trade until 1994 – birth of the WTO

5. Origins of UNCTAD • The role of commodities – timeline to the birth of UNCTAD: • 1927 - World Economic Conference recommends agreements as means of cooperation (agreements on tin, wheat, sugar, tea and rubber ) • 1947 – ICCICA created by ECOSOC (four agreements concluded: coffee, tin, wheat and sugar – ICAs could stabilise prices, ensure producer incomes and correct surpluses). • 1955 – Revival of the idea of an international trade body in ECOSOC • 1962 – Cairo conference on the problems of economic development: Cairo Declaration recommending creation of UNCTAD – not enough ICAs to solve general commodity problem • 1964 – Creation of UNCTAD (‘UNCTAD I’), Geneva – takes over mandate of ICCICA.

6. 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)

7. Mandates 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) WTO • 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

8. Functioning WTO • 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

10. Ideas on Development 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 WTO • 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

11. 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…

12. 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’)

13. Thank You Joseph Clements Associate Economic Affairs Officer UNCTAD Virtual Institute http://vi.unctad.org http://www.unctad.org Joseph.Clements@unctad.org Tel. + 41 22 91 75724

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