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International Monetary Fund

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International Monetary Fund

IMF member states in green

Headquarters Washington, D.C., USA
Managing Director Dominique Strauss-Kahn
Central Bank of
Base borrowing rate 5.50%
Website www.imf.org
The International Monetary Fund (IMF) is an international
organization that oversees the global financial system by observing
exchange rates and balance of payments, as well as offering financial
and technical assistance. Its headquarters are located in Washington,
D.C., USA.
Contents
[hide]

• 1 Organization and purpose

o 1.1 History
o 1.2 Today
• 2 Data Dissemination Systems
• 3 Membership qualifications
 • 4 IMF Members' Quotas and Voting Power, and IMF Board of Governors
• 5 Assistance and reforms
• 6 IMF/World Bank support of Military Dictatorships
• 7 Criticism
• 8 Past managing directors
• 9 See also
• 10 Notes
• 11 References

• 12 External links

[edit] Organization and purpose

Headquarters in Washington D.C.

The International Monetary Fund (IMF) was established in 1944, with
certain goals in mind. One of these was to stabilize exchange rates and
supervise the reconstruction of the worlds international payment
system. Countries contributed to a pool which could be borrowed from,
on a temporary basis, by countries with payment imbalances. (Condon,
2007)
The IMF describes itself as "an organization of 185 countries
(Montenegro being the 185th, as of January 18, 2007), working to
foster global monetary cooperation, secure financial stability, facilitate
international trade, promote high employment and sustainable
economic growth, and reduce poverty". With the exception of North
Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN
member states participate directly in the IMF. Some are represented by
other member states on a 24-member Executive Board but all member
countries are members of the IMF's Board of Governors.[citation needed]

[edit] History

The IMF came into life on December 27, 1945, when the first 29
countries signed its Articles of Agreement. The statutory purposes of
the IMF today are the same as when they were formulated in 1944
(see #Assistance and reforms)
[edit] Today

From the end of World War II until the late-1970s, the capitalist world
experienced unprecedented growth in real incomes. (Since then, the
integration of China and Eastern and Central Europe into the capitalist
system has added substantially to the growth of the system.) Within
the capitalist system, the benefits of growth have not flowed equally to
all (either within or among nations) but overall there has been an
increase in prosperity that contrasts starkly with the conditions within
capitalist countries during the interwar period. The lack of a recurring
global depression is probably due to improvements in the conduct of
international economic policies that have encouraged the growth of
international trade and helped smooth the economic cycle of boom and
bust.
In the decades since World War II, apart from rising prosperity, the
world economy and monetary system have undergone other major
changes that have increased the importance and relevance of the
purposes served by the IMF, but that has also required the IMF to adapt
and reform. Rapid advances in technology and communications have
contributed to the increasing international integration of markets and
to closer linkages among national economies. As a result, financial
crises, when they erupt, now tend to spread more rapidly among
countries.
The IMF's influence in the global economy steadily increased as it
accumulated more members. The number of IMF member countries
has more than quadrupled from the 44 states involved in its
establishment, reflecting in particular the attainment of political
independence by many developing countries and more recently the
collapse of the Soviet bloc. The expansion of the IMF's membership,
together with the changes in the world economy, have required the
IMF to adapt in a variety of ways to continue serving its purposes
effectively.
During April 2007 Ecuador announced its intention to withdraw from
the IMF, followed by Venezuela which made this step public on April 30,
2007. As of October 2007, Ecuador continued its membership status.
On October 24, 2007 Venezuela announced its withdrawal decision was
on hold.

[edit] Data Dissemination Systems

IMF Data Dissemination Systems participants: IMF member using SDDS IMF
member, using GDDS IMF member, not using any of the DDSystems non-IMF entity using
SDDS non-IMF entity using GDDS no interaction with the IMF
In 1995, the International Monetary Fund (IMF) began work on data
dissemination standards with the view of guiding IMF member
countries to disseminate their economic and financial data to the
public. The International Monetary and Financial Committee (IMFC)
endorsed the guidelines for the dissemination standards and they were
split into two tiers: The General Data Dissemination System (GDDS)
and the Special Data Dissemination Standard (SDDS).
The IMF executive board approved the SDDS and GDDS in 1996 and
1997 respectively and subsequent amendments were published in a
revised “Guide to the General Data Dissemination System”. The
system is aimed primarily at statisticians and aims to improve many
aspects of statistical systems in a country. It is also part of the World
Bank Millennium Development Goals and Poverty Reduction Strategic
Papers.
The IMF established a system and standard to guide members in the
dissemination to the public of their economic and financial data.
Currently there are two such systems: General Data Dissemination
System (GDDS) and its superset Special Data Dissemination System
(SDDS), for those member countries having or seeking access to
international capital markets.
The primary objective of the GDDS is to encourage IMF member
countries to build a framework to improve data quality and increase
statistical capacity building. This will involve the preparation of
metadata describing current statistical collection practices and setting
improvement plans. Upon building a framework, a country can
evaluate statistical needs, set priorities in improving the timeliness,
transparency, reliability and accessibility of financial and economic
data.
Some countries initially used the GDDS, but lately upgraded to SDDS.
Some entities that are not themselves IMF members also contribute
statistical data to the systems:

• Palestinian Authority – GDDS

• Hong Kong – SDDS
• European Union institutions:
o the European Central Bank for the Eurozone – SDDS
o Eurostat for the whole EU – SDDS, thus providing data from Cyprus (not
using any DDSystem on its own) and Malta (using only GDDS on its
own)

[edit] Membership qualifications

Any country may apply for membership to the IMF. The application will
be considered first by the IMF's Executive Board. After its
consideration, the Executive Board will submit a report to the Board of
Governors of the IMF with recommendations in the form of a
"Membership Resolution." These recommendations cover the amount
of quota in the IMF, the form of payment of the subscription, and other
customary terms and conditions of membership. After the Board of
Governors has adopted the "Membership Resolution," the applicant
state needs to take the legal steps required under its own law to
enable it to sign the IMF's Articles of Agreement and to fulfil the
obligations of IMF membership.
A member's quota in the IMF determines the amount of its
subscription, its voting weight, its access to IMF financing, and its
allocation of Special Drawing Rights (SDRs). A member state cannot
unilaterally increase its quota — increases must be approved by the
Executive Board and are linked to formulas that include many variables
such as the size of a country in the world economy. For example, in
2001, China was prevented from increasing its quota as high as it
wished, ensuring it remained at the level of the smallest G7 economy
(Canada).[1] In September 2005, the IMF's member countries agreed to
the first round of ad hoc quota increases for four countries, including
China. A second round of increases for a larger number of countries is
currently under negotiation with the aim of redistributing voting power
to raise the voice developing countries. These negotiations are
targeted for completion in the autumn of 2008.
Examples of press coverage of the discussions regarding changes to
the voting formula to increase equity:[2]

[edit] IMF Members' Quotas and Voting

Power, and IMF Board of Governors
Table showing the top 20 member countries in terms of voting power:[3]
Quota:
IMF Quota: Votes:
Millions Alternate Votes:
Member Percentage Governor Percentage
of Governor Number
Country of Total of Total
SDRs
Australia 3236.4 1.49 Peter Costello Ken Henry 32614 1.47
Jean-Pierre
Belgium 4605.2 2.12 Guy Quaden 46302 2.09
Arnoldi
Henrique de
Guido
Brazil 3036.1 1.4 Campos 30611 1.38
Mantega
Meirelles
David A.
Canada 6369.2 2.93 Jim Flaherty 63942 2.89
Dodge
ZHOU
China 8090.1 3.72 HU Xiaolian 81151 3.66
Xiaochuan
France 10738.5 4.94 Christine Christian 107635 4.86
 Lagarde Noyer
Axel A. Peer
Germany 13008.2 5.99 130332 5.88
Weber Steinbrück
P. Yaga V.
India 4158.2 1.91 41832 1.89
Chidambaram Reddy
Tommaso
Italy 7055.5 3.25 Padoa- Mario Draghi 70805 3.2
Schioppa
Toshihiko
Japan 13312.8 6.13 Koji Omi 133378 6.02
Fukui
Seong Tae
Korea 2927.3 1.35 Okyu Kwon 29523 1.33
Lee
Agustín Guillermo
Mexico 3152.8 1.45 31778 1.43
Carstens Ortiz
A.H.E.M. L.B.J. van
Netherlands 5162.4 2.38 51874 2.34
Wellink Geest
Russian Aleksei Sergey
5945.4 2.74 59704 2.7
Federation Kudrin Ignatiev
Saudi Ibrahim A. Al- Hamad Al-
6985.5 3.21 70105 3.17
Arabia Assaf Sayari
Miguel
Spain 3048.9 1.4 Pedro Solbes Fernández 30739 1.39
Ordóñez
Sweden 2395.5 1.1 Stefan Ingves Per Jansson 24205 1.09
Jean-Pierre Hans-Rudolf
Switzerland 3458.5 1.59 34835 1.57
Roth Merz
United Alistair
10738.5 4.94 Mervyn King 107635 4.86
Kingdom Darling
United Ben
37149.3 17.09 Henry Paulson 371743 16.79
States Bernanke
Rodrigo
Gastón Parra
Venezuela 2659.1 1.22 Cabeza 26841 1.21
Luzardo
Morales
remaining
165 60081.4 29.14 respective respective 637067 28.78
countries

[edit] Assistance and reforms

The primary mission of the IMF is to provide financial assistance to
countries that experience serious financial difficulties. Member states
with balance of payments problems may request loans and/or
organizational management of their national economies. In return, the
countries are usually required to launch certain reforms, which have
often been dubbed the "Washington Consensus". These reforms are
generally required because countries with fixed exchange rate policies
can engage in fiscal, monetary, and political practices which may lead
to the crisis itself. For example, nations with severe budget deficits,
rampant inflation, strict price controls, or significantly over-valued or
under-valued currencies run the risk of facing balance of payment
crises in their future. Thus, the structural adjustment programs are at
least ostensibly intended to ensure that the IMF is actually helping to
prevent financial crises rather than merely funding financial
recklessness.
However, this approach is not without its critics, as described below.
Many supporters of the IMF contend that some criticisms are the result
of the fact that many people are not familiar with the operations and
objectives of the IMF, and blame a lack of transparency within the IMF
for this, as well as the dense nature of international finance in general.
Suggestions for improving these understandings have included greater
community outreach efforts, tighter accounting standards, possible
regulatory oversight, and changes in the organizational structure of the
IMF to include fewer economists, whom many fear are attempting to
use developing countries as nothing more than lab rats. Some fear,
however, that some of these reforms to the IMF itself introduce political
considerations rather than economic considerations, many of which
may have resulted in the financial crises in the first place. According to
Ulrich Beck, the International Monetary Fund is an international risk
community combating the threat of a global financial crisis.

[edit] IMF/World Bank support of Military

Dictatorships
The role of the Bretton Woods institutions has been controversial to
some since the late Cold War period. Critics claim that IMF policy
makers deliberately supported military dictatorships friendly to
American and European corporations. Critics also claim that the IMF is
generally apathetic or hostile to their views of democracy, human
rights, and labor rights. The controversy has helped spark the anti-
globalization movement. Others claim the IMF has little power to
democratize sovereign states, although that is not its stated objective,
which is to advise and promote financial stability. Arguments in favor of
the IMF say that economic stability is a precursor to democracy,
however critics highlight various examples in which IMF investment
drastically reduces as a countries become democratic.[4]
Countries that are members of the IMF/World Bank whilst under a
Military dictatorship (support from various sources in $ Billion):[5]
Country Dictator In In debts at start of Debts at end of Country Dictator
indebted to power power Dictatorship(1) Dictatorship(2) Debts in debts
 generated
IMF/World
from to 1996 $
Bank
billion
Military
Argentina 1976 1983 9.3 48.9 93.8 39.6
dictatorship
Military
Bolivia 1962 1980 0 2.7 5.2 2.7
dictatorship
Military
Brazil 1964 1984 5.1 105.1 179 100
dictatorship
Augusto
Chile 1974 1989 5.2 18 27.4 12.8
Pinochet
Military
El Salvador 1979 1994 0.9 2.2 2.2 1.3
dictatorship
Mengistu Haile
Ethiopia 1977 1991 0.5 4.2 10 3.7
Mariam
Jean-Claude
Haiti 1971 1986 0 0.7 0.9 0.7
Duvalier
Indonesia Suharto 1967 1998 3 129 129 126
Iran Shah 1953 1979 0 4.5 21.2 4.5
Kenya Moi 1979 2002 2.7 6.9 6.9 4.2
Liberia Doe 1979 1990 0.6 1.9 2.1 1.3
Malawi Banda 1964 1994 0.1 2 2.3 1.9
Nigeria Buhari/Abacha 1984 1998 17.8 31.4 31.4 13.6
Pakistan Zia-ul Haq 1977 1988 7.6 17
Military
Pakistan 1990 present 20.6 29.9 29.9 18.7
dictatorship
Paraguay Stroessner 1954 1989 0.1 2.4 2.1 2.3
Philippines Marcos 1965 1986 1.5 28.3 41.2 26.8
Somalia Siad Barre 1969 1991 0 2.4 2.6 2.4
South Africa apartheid 1992 18.7 23.6 18.7
Nimeiry/al-
Sudan 1969 present 0.3 17 17 16.7
Mahdi
Syria Assad 1970 present 0.2 21.4 21.4 21.2
Military
Thailand 1950 1983 0 13.9 90.8 13.9
dictatorship
Zaire/Congo Mobutu 1965 1997 0.3 12.8 12.8 12.5
Notes: Debt at takeover by dictatorship; earliest data published by the
World Bank is for 1970. Debt at end of dictatorship (or 1996, most
recent date for World Bank data). Pakistan had two periods of military
dictatorship.

[edit] Criticism
Two criticisms from economists have been that financial aid is always
bound to so-called "Conditionalities", including Structural Adjustment
Programs. Conditionalities, which are the economic performance
targets established as a precondition for IMF loans, it is claimed, retard
social stability and hence inhibit the stated goals of the IMF, while
Structural Adjustment Programs lead to an increase in poverty in
recipient countries.[6]
Typically the IMF and its supporters advocate a Keynesian approach. As
such, adherents of supply-side economics generally find themselves in
open disagreement with the IMF. The IMF frequently advocates
currency devaluation, criticized by proponents of supply-side
economics as inflationary. Secondly they link higher taxes under
"austerity programmes" with economic contraction.
Currency devaluation is recommended by the IMF to the governments
of poor nations with struggling economies. Supply-side economists
claim these Keynesian IMF policies are destructive to economic
prosperity.
That said, the IMF sometimes advocates "austerity programmes,"
increasing taxes even when the economy is weak, in order to generate
government revenue and balance budget deficits, which is the
opposite of Keynesian policy. These policies were criticised by Joseph E.
Stiglitz, former chief economist and Senior Vice President at the World
Bank, in his book Globalization and Its Discontents.[7] He argued that by
converting to a more Monetarist approach, the fund no longer had a
valid purpose, as it was designed to provide funds for countries to
carry out Keynesian reflations.
Complaints are also directed toward International Monetary Fund gold
reserve being undervalued. At its inception in 1945, the IMF pegged
gold at US$35 per Troy ounce of gold. In 1973 the Nixon administration
lifted the fixed asset value of gold in favour of a world market price.
Hence the fixed exchange rates of currencies tied to gold were
switched to a floating rate, also based on market price and exchange.
This largely came about because Petrodollars outside the United States
were more than could be backed by the gold at Fort Knox under the
fixed exchange rate system. The fixed rate system only served to limit
the amount of assistance the organization could use to help debt-
ridden countries. Current IMF rules prohibit members from linking their
currencies to gold.
Argentina, which had been considered by the IMF to be a model
country in its compliance to policy proposals by the Bretton Woods
institutions, experienced a catastrophic economic crisis in 2001 , which
some believe to have been caused by IMF-induced budget restrictions
— which undercut the government's ability to sustain national
infrastructure even in crucial areas such as health, education, and
security — and privatization of strategically vital national
resources.[citation needed] Others attribute the crisis to Argentina's
maldesigned fiscal federalism, which caused subnational spending to
increase rapidly.[8] The crisis added to widespread hatred of this
institution in Argentina and other South American countries, with many
blaming the IMF for the region's economic problems.[9] The current —
as of early 2006 — trend towards moderate left-wing governments in
the region and a growing concern with the development of a regional
economic policy largely independent of big business pressures has
been ascribed to this crisis.
Another example of where IMF Structural Adjustment Programmes
aggravated the problem was in Kenya. Before the IMF got involved in
the country, the Kenyan central bank oversaw all currency movements
in and out of the country. The IMF mandated that the Kenyan central
bank had to allow easier currency movement. However, the
adjustment resulted in very little foreign investment, but allowed
Kamlesh Manusuklal Damji Pattni, with the help of corrupt government
officials, to siphon off billions of Kenyan shillings in what came to be
known as the Goldenberg scandal, leaving the country worse off than it
was before the IMF reforms were implemented.
Overall the IMF success record is perceived as limited. While it was
created to help stabilize the global economy, since 1980 critics claim
over 100 countries (or reputedly most of the Fund's membership) have
experienced a banking collapse that they claim have reduced GDP by
four percent or more, far more than at any time in Post-Depression
history. The considerable delay in the IMF's response to any crisis, and
the fact that it tends to only respond to rather than prevent them, has
led many economists to argue for reform. In 2006, an IMF reform
agenda called the Medium Term Strategy was widely endorsed by the
institution's member countries. The agenda includes changes in IMF
governance to enhance the role of developing countries in the
institution's decision-making process and steps to deepen the
effectiveness of its core mandate, which is known as economic
surveillance or helping member countries adopt macroeconomic
policies that will sustain global growth and reduce poverty. On June 15,
2007, the Executive Board of the IMF adopted the 2007 Decision on
Bilateral Surveillance, a landmark measure that replaced a 30-year-old
decision of the Fund's member countries on how the IMF should
analyse economic outcomes at the country level.
Whatever the feelings people in the Western world have for the IMF,
research by the Pew Research Center shows that more than 60 percent
of Asians and 70 percent of Africans feel that the IMF and the World
Bank have a positive effect on their country.[10] This may largely be due
to the fact that the media and textbooks in developing countries'
schools describe the IMF as having a positive role in their countries,
despite claims that there has been an increase in poverty, increase in
the debt-burden, and a reduction of economic growth that IMF
opponents argue its policies have resulted in.[citation needed] In 2005, the
IMF was the first multilateral financial institution to implement a
sweeping debt-relief program for the world's poorest countries known
as the Multilateral Debt Relief Initiative. By year-end 2006, 23 countries
mostly in sub-Saharan Africa and Central America had received total
relief of debts owed the IMF.
The documentary Life and Debt deals with the IMF's policies' influence
on Jamaica and its economy from a critical point of view. In 1978, one
year after Jamaica first entered a borrowing relationship with the IMF,
the Jamaican dollar was still worth more on the open exchange than
the US dollar; by 1995, when Jamaica terminated that relationship, the
Jamaican dollar had eroded to less than 2 cents US. Such observations
lead to skepticism that IMF involvement is necessarily helpful to a third
world economy.

[edit] Past managing directors

An unwritten rule establishes that the IMF's managing director must be
European and that the president of the World Bank must be from the
United States. This established practice is now increasingly being
questioned and competition for these two posts may soon open up to
include other qualified candidates from any part of the world.
Executive Directors, who confirm the managing director are voted in by
Finance Ministers from countries they represent. The First Deputy
Managing Director of the IMF, the second-in-command, has
traditionally been (and is today) an American.
The IMF is for the most part controlled by the major Western Powers,
with voting rights on the Executive board based on a quota derived
from a monetary stake in the institution. Rarely does the board vote
and pass issues contradicting the will of the US or Europeans. There
have been some exceptions in the past. Dr. Mohamed Finaish from
Libya, the Executive Director representing the majority of the Arab
World and Pakistan, was a tireless defender[citation needed] of the developing
nations' rights at the IMF. He stood steadfast in his beliefs and
principles[citation needed] for fourteen years until his defeat in the 1992
elections to an Egyptian IMF Staff Member.
Mr Rodrigo Rato became the ninth Managing Director of the IMF on
June 7, 2004 and he is expected to resign his post at the end of
October, 2007, citing personal reasons. His replacement will once
again come from Europe, although Europeans have signalled that they
may be open to relinquishing their hold on the post in the future.
EU ministers agreed on the candidacy of Dominique Strauss-Kahn as
managing director of the IMF at the Economic and Financial Affairs
Council meeting in Brussels on July 10, 2007. On September 28, 2007,
the International Monetary Fund's 24 executive directors elected Mr.
Strauss-Kahn as new managing director, with broad support including
from the United States and the 27-nation European Union. Strauss-
Kahn will replace Spain's Rodrigo de Rato, who will retire after the IMF's
Annual Meetings, at the end of October. [11] The only other nominee
was Josef Tosovsky, a late candidate proposed by Russia. Strauss-Kahn
said: "I am determined to pursue without delay the reforms needed for
the IMF to make financial stability serve the international community,
while fostering growth and employment." [12]

Dates Name Country

May 6, 1946 – May 5, 1951 Camille Gutt Belgium

August 3, 1951 – October 3, 1956 Ivar Rooth Sweden

November 21, 1956 – May 5, 1963 Per Jacobsson Sweden

September 1, 1963 – August 31, 1973 Pierre-Paul Schweitzer France

September 1, 1973 – June 16, 1978 Johannes Witteveen Netherlands

June 17, 1978 – January 15, 1987 Jacques de Larosière France

January 16, 1987 – February 14,

Michel Camdessus France
2000

May 1, 2000 – March 4, 2004 Horst Köhler Germany

June 7, 2004 – October 31, 2007 Rodrigo Rato Spain

November 1, 2007 – present Dominique Strauss-Kahn France

[edit] See also

• Third world debt
• Economics
• Special Drawing Rights
 • Development aid
• Bretton Woods Institutions
• Organisation for Economic Co-operation and Development
• Globalization and Its Discontents
• Bancor
• Bank for International Settlements
• World Bank
• Inter-American Development Bank
• Bretton Woods system

[edit] Notes
1. ^ Barnett, Michael and Finnemore, Martha. Rules for the World: International
Organizations in Global Politics. Ithaca: Cornell University Press, 2004.
2. ^ IMF Seeks Role in Shifting Global Economy, National Public Radio (April 23, 2006)
3. ^ "http://www.imf.org/external/np/sec/memdir/members.htm#3", IMF. Retrieved on
2007-09-24.
4. ^ "World Bank - IMF support to dictatorships", cadtm. Retrieved on 2007-09-21.
5. ^ "Dictators and debt", Jubilee 2000. Retrieved on 2007-09-21.
6. ^ Hertz, Noreena. The Debt Threat. New York: Harper Collins Publishers, 2004.
7. ^ Stiglitz, Joseph. Globalization and its Discontents. New York: WW Norton &
Company, 2002.
8. ^ Stephen Webb, "Argentina: Hardening the Provincial Budget Constraint," in Rodden,
Eskeland, and Litvack (eds.), Fiscal Decentralization and the Challenge of Hard Budget
Constraints (Cambridge, Mass.: MIT Press, 2003).
9. ^ How the IMF Props Up the Bankrupt Dollar System, by F. William Engdahl,
US/Germany
10. ^ GLOBAL ATTITUDES : 44-NATION MAJOR SURVEY (2002), The Pew Research
Center for the People & the Press
11. ^ Yahoo.com, IMF to choose new director
12. ^ BBC NEWS, Frenchman is named new IMF chief

[edit] References
• Jan Joost Teunissen and Age Akkerman (eds.) (2005). Helping the Poor? The
IMF and Low-Income Countries. FONDAD. ISBN 90-74208-25-8.
• Dreher, Axel (2002). The Development and Implementation of IMF and World
Bank Conditionality. HWWA. ISSN 1616-4814.
• Dreher, Axel (2004). "A Public Choice Perspective of IMF and World Bank
Lending and Conditionality". Public Choice 119 (3–4): 445–464.
• Dreher, Axel (2004). "The Influence of IMF Programs on the Re-election of
Debtor Governments". Economics & Politics 16 (1): 53–75.
• Dreher, Axel (2003). "The Influence of Elections on IMF Programme
Interruptions". The Journal of Development Studies 39 (6): 101–120.
• The Best Democracy Money Can Buy by Greg Palast (2002)
• The IMF and The World Bank: How do they differ? by David D. Driscoll
 • Rivalries between IMF and IBRD, "Sister-talk", The Economist (2007-03-01)
• George, S. (1988). A Fate Worse Than Debt. London: Penguin Books.
• Hancock, G. (1991). Lords of Poverty: The Free-Wheeling Lifestyles, Power,
Prestige and Corruption of the Multi-billion Dollar Aid Business. London:
Mandarin.

[edit] External links

• International Monetary Fund website
• Finance & Development - A quarterly magazine of the IMF
• Annual Reports of the Executive Board
• World Economic Outlook Reports
• IMF Publications
• August Review - Global Banking: The IMF
• Kenneth Rogoff - The sisters at 60
• How the IMF Props Up the Dollar System
• IMF’s Origins as a Blueprint for Its Future, Anna J. Schwartz, National Bureau of
Economic Research
• Center for International Finance & Development University of Iowa research
center, includes a 300 page E-book on the IMF and World Bank.
• Political Forecasting? The IMF’s Flawed Growth Projections for Argentina and
Venezuela by David Rosnick and Mark Weisbrot, Center for Economic and Policy
Research
• What's the difference between the IMF and the World Bank? by economist Arthur
MacEwan, in Dollars & Sense magazine
• "Monetary Freedom Act" HR 391, by Congressman Ron Paul, 1981
• Bretton Woods Project Critical voices on the World Bank and IMF

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November 2007.
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The World Trade Organization (WTO), (OMC - French: Organisation

mondiale du commerce, Spanish: Organización Mundial del Comercio),
is an international organization designed to supervise and liberalize
international trade. The WTO came into being on January 1, 1995, and
is the successor to the General Agreement on Tariffs and Trade (GATT),
which was created in 1947, and continued to operate for almost five
decades as a de facto international organization.

The World Trade Organization deals with the rules of trade between
nations at a near-global level; it is responsible for negotiating and
implementing new trade agreements, and is in charge of policing
member countries' adherence to all the WTO agreements, signed by
the bulk of the world's trading nations and ratified in their
parliaments.[3] Most of the WTO's current work comes from the 1986-94
negotiations called the Uruguay Round, and earlier negotiations under
the GATT. The organization is currently the host to new negotiations,
under the Doha Development Agenda (DDA) launched in 2001.[4]

The WTO is governed by a Ministerial Conference, which meets every

two years; a General Council, which implements the conference's
policy decisions and is responsible for day-to-day administration; and a
director-general, who is appointed by the Ministerial Conference. The
WTO's headquarters are in Geneva, Switzerland.

Contents
[hide]

• 1 History
o 1.1 ITO and GATT 1947
o 1.2 GATT rounds of negotiations
 1.2.1 From Geneva to Tokyo
 1.2.2 Uruguay Round
o 1.3 Doha Round
• 2 Mission, functions and principles
o 2.1 Functions
o 2.2 Principles of the trading system
• 3 Formal Structure
• 4 Dispute settlement
• 5 Accession and membership
o 5.1 Accession process
o 5.2 Members and observers
• 6 Agreements
o 6.1 Agreement on Agriculture (AoA)
 6.1.1 Domestic support
 6.1.2 Market Access
 6.1.3 Export subsidies
  6.1.4 Criticism
o 6.2 General Agreement on Trade in Services (GATS)
o 6.3 Trade-Related Aspects of Intellectual Property Rights (TRIPs)
Agreement
o 6.4 Sanitary and Phyto-Sanitary (SPS) Agreement
 6.4.1 SPS & Genetically Modified Organisms (GMOs)
 6.4.2 Criticism
o 6.5 Agreement on Technical Barriers to Trade (TBT)
• 7 Criticism
• 8 Ministerial conferences
o 8.1 First ministerial conference
o 8.2 Second ministerial conference
o 8.3 Third ministerial conference
o 8.4 Fourth ministerial conference
o 8.5 Fifth ministerial conference
o 8.6 Sixth ministerial conference
• 9 Citations and notes
• 10 References
o 10.1 Printed sources
o 10.2 Online sources
• 11 Further reading
o 11.1 Books and reports on the WTO
o 11.2 Articles on the WTO
o 11.3 Articles by the WTO
• 12 See also
• 13 External links
o 13.1 Official WTO Pages
o 13.2 Government Pages on the WTO
o 13.3 Media Pages on the WTO

o 13.4 Non-Governmental Organization Pages on the WTO (Alphabetical

List)

[edit] History
See also: Chronology of WTO's key events

[edit] ITO and GATT 1947

For more details on this topic, see International Trade Organization.

John Maynard Keynes and Harry Dexter White at the Bretton Woods Conference – Both
economists had been strong advocates of a liberal international trade environment, and
recommended the establishment of three institutions: the IMF (fiscal and monetary
issues), the World Bank (financial and structural issues), and the ITO (international
economic cooperation).[5]
The WTO's predecessor, the General Agreement on Tariffs and Trade
(GATT), was established after World War II in the wake of other new
multilateral institutions dedicated to international economic
cooperation - notably the Bretton Woods institutions now known as the
World Bank and the International Monetary Fund. Although an
agreement covering trade was not negotiated at Bretton Woods, the
Conference did recognize the need for a comparable international
institution.[6] In December 1945, the United States invited its war-time
allies to enter into negotiations to conclude a multilateral agreement
for the reciprocal reduction of tariffs on trade in goods. At the proposal
of the United States, the United Nations Economic and Social
Committee adopted a resolution, in February 1946, calling for a
conference to draft a charter for an International Trade Organization
(ITO). A Preparatory Committee was established in February 1946, and
worked until November 1947 on the charter of an international
organization for trade. By October 1947 an agreement on the GATT
was reached in Geneva, and on October 30, 1947 twenty three
countries signed the "Protocol of Provisional Application of the General
Agreement on Tariffs and Trade".[7]
In March 1948, the negotiations on the ITO Charter were not
successfully completed in Havana (Havana Charter). The Charter
provided for the establishment of the ITO, and set out the basic rules
for international trade and other international economic matters. The
ITO Charter, however, never entered into force; while repeatedly
submitted to the US Congress, it was never approved. The most usual
argument against the new organization was that it would be involved
in internal economic issues.[8] On December 6, 1950 President Truman
announced that he would no longer seek Congressional approval of the
ITO Charter.[9] In the absence of an international organization for trade,
the GATT would over the years "transform itself" into a de facto
international organization.[10]

[edit] GATT rounds of negotiations

See also: General Agreement on Tariffs and Trade

The GATT was the only multilateral instrument governing international
trade from 1948 until the WTO was established in 1995.[11] Despite
attempts in the mid 1950s and 1960s to create some form of
institutional mechanism for international trade, the GATT continued to
operate for almost half a century as a semi-institutionalized
multilateral treaty regime on a provisional basis.[12]

[edit] From Geneva to Tokyo

Seven rounds of negotiations occurred under the GATT. The first GATT
trade rounds concentrated on further reducing tariffs. Then, the
Kennedy Round in the mid-sixties brought about a GATT anti-dumping
Agreement and a section on development. The Tokyo Round during the
seventies was the first major attempt to tackle trade barriers that do
not take the form of tariffs, and to improve the system, adopting a
series of agreements on non-tariff barriers, which in some cases
interpreted existing GATT rules, and in others broke entirely new
ground. Because these plurilateral agreements were not accepted by
the full GATT membership, they were often informally called "codes".
Several of these codes were amended in the Uruguay Round, and
turned into multilateral commitments accepted by all WTO members.
Only four remained plurilateral (those on government procurement,
bovine meat, civil aircraft and dairy products), but in 1997 WTO
members agreed to terminate the bovine meat and dairy agreements,
leaving only two.[11]

[edit] Uruguay Round

For more details on this topic, see Uruguay Round.

Well before GATT's 40th anniversary, its members concluded that the
GATT system was straining to adapt to a new globalizing world
economy.[13] In response to the problems identified in the 1982
Ministerial Declaration (structural deficiencies, spill-over impacts of
certain countries' policies on world trade GATT could not manage etc.),
the eighth GATT round — known as the Uruguay Round — was
launched in September 1986, in Punta del Este, Uruguay.[14] It was the
biggest negotiating mandate on trade ever agreed: the talks were
going to extend the trading system into several new areas, notably
trade in services and intellectual property, and to reform trade in the
sensitive sectors of agriculture and textiles; all the original GATT
articles were up for review.[15]
The round was supposed to end in December 1990, but the US and EU
disagreed on how to reform agricultural trade and decided to extend
the talks.[16] Finally, In November 1992, the US and EU settled most of
their differences in a deal known informally as "the Blair House
accord", and on April 15, 1994, the deal was signed by ministers from
most of the 123 participating governments at a meeting in Marrakesh,
Morocco.[17] The agreement established the World Trade Organization,
which came into being upon its entry into force on January 1, 1995,
and replaced GATT as an international organization.[15] It is widely
regarded as the most profound institutional reform of the world trading
system since the GATT's establishment.[18]

During the Doha Round, the US government blamed Brazil and India for being
inflexible, and the EU for impeding agricultural imports.[19] President of Brazil, Luiz
Inácio Lula da Silva, responded to the criticisms arguing that progress will be only
achieved if the richest countries (especially the US and EU) make deeper cuts in their
agricultural subsidies, and open further their markets for agricultural goods.[20]
The GATT still exists as the WTO's umbrella treaty for trade in goods,
updated as a result of the Uruguay Round negotiations (a distinction is
made between GATT 1994, the updated parts of GATT, and GATT 1947,
the original agreement which is still the heart of GATT 1994).[13] The
GATT 1994 is not however the only legally binding agreement included
in the Final Act; a long list of about 60 agreements, annexes, decisions
and understandings was adopted. In fact, the agreements fall into a
simple structure with six main parts:

• an umbrella agreement (the Agreement Establishing the WTO);

• agreements for each of the three broad areas of trade that the WTO covers: goods
and investment (the Multilateral Agreements on Trade in Goods including the
GATT 1994 and the TRIMS), services (GATS), and intellectual property (TRIPS);
• dispute settlement (DSU); and
• reviews of governments' trade policies (TPRM).[21]

[edit] Doha Round

For more details on this topic, see Doha Round.

See also: Doha Declaration
The WTO launched the current round of negotiations, the Doha
Development Agenda (DDA) or Doha Round, at the Fourth Ministerial
Conference in Doha, Qatar in November 2001. The Doha round was to
be an ambitious effort to make globalisation more inclusive and help
the world's poor, particularly by slashing barriers and subsidies in
farming.[22] The initial agenda comprised both further trade
liberalization and new rule-making, underpinned by commitments to
strengthen substantially assistance to developing countries. [23]
The talks have been highly contentious and agreement has not been
reached, despite the intense negotiations at Fifth Ministerial
Conference in Cancún in 2003 and at the Sixth Ministerial Conference
in Hong Kong on December 13 - 18, 2005. On July 24, 2006, at the end
of yet another futile gathering of trade ministers in Geneva, Pascal
Lamy, the WTO's Director-General, formally suspended the
negotiations.[22] Nevertheless, in his report to the WTO General Council
on February 7, 2007, Lamy said that "political conditions are now more
favorable for the conclusion of the Round than they have been for a
long time". He then added that "political leaders around the world
clearly want us to get fully back to business, although we in turn need
their continuing commitment".[24]
Foreign Technology Agreements
 4.1 With a view to injecting the desired level of technological dynamism in Indian industry and for promoting an industrial
environment where the acquisition of technological capability receives priority, foreign technology induction is encouraged
both through FDI and through foreign technology collaboration agreements. Foreign technology collaborations are
permitted either through the automatic route under delegated powers exercised by the RBI, or by the Government.
However, cases involving industrial licenses/small scale reserved items do not qualify for automatic approval and would
require consideration and approval by the Government. Automatic route for technology colloboration would also not be
available to those who have, or had any previous technology transfer/trade-mark agreement in the same or allied field in
India. Further, automatic approval for EOU/EHTP/STP units are governed by provisions under Para 5.2 and 6.2
Automatic Approval
4.2 The Reserve Bank of India, through its regional offices, accords automatic approval to all industries for foreign
technology collaboration agreements subject to (i) the lump sum payments not exceeding US $ 2 Million; (ii) royalty
payable being limited to 5 per cent for domestic sales and 8 per cent for exports, subject to a total payment of 8 per cent
on sales over a 10 year period; and (iii) the period for payment of royalty not exceeding 7 years from the date of
commencement of commercial production, or 10 years from the date of agreement, whichever is earlier (The aforesaid
royalty limits are net of taxes and are calculated according to standard conditions). [For procedure for automatic approval,
refer to para 9.1].
4.2(i) Payment of royalty upto 2% for exports and 1% for domestic sales is allowed under automatic route on use of trademarks
and brand name of the foreign collaborator without technology transfer.
4.2(ii) Payment of royalty upto 8% on exports and 5% on domestic sales by wholly owned subsidiaries to offshore parent
companies is allowed under the automatic route without any restriction on the duration of royalty payments.
Government Approval
4.3 For the following categories, Government approval would be necessary:
(a) proposals attracting compulsory licensing
(b) Items of manufacture reserved for the small acale sector
(c) Proposals involving any previous joint venture, or technology transfer/trademark agreement in the same or allied field
in India. The definition of "same" and "allied" field would be as per 4 digit NIC 1987 Code and 3 digit NIC 1987 Code.
(d) Extension of foreign technology collaboration agreements (including those cases which may have received automatic
approval in the first instace)
(e) Proposals not meeting any or all of the parameters for automatic approval as given in para 4.2.
[For procedure for Government approval refer to Para 9.2]
4.4 The items of foreign technology collaboration which are eligible for approval through the automatic route, and by the
Government are technical know how fees, payment for design and drawing, payment for engineering service and royalty.
Exclusive payment for use of brand names and trademarks are not allowed, although such payments may be subsumed
in the other fee payable.
4.5 Payments for hiring of foreign technicians, deputation of Indian technicians abroad, and testing of indigenous raw
material, products, indigenously developed technology in foreign countries are governed by separate RBI procedures and
rules and are not covered by the foreign technology collaboration approval. Similarly, payments for imports of plant and
machinery and raw material are also not covered by the foreign technology collaboration approval. For any of these
items, entrepreneurs may contact the RBI.
EXPORT HOUSE/TRADING HOUSE/STAR TRADING HOUSE/SUPER
STAR TRADING HOUSE.

Existing eligibility criterion for recognition of EH/TH/STH/SSTH based on

average annual export performance of preceding 3 licensing years was
Rs.10 crores, 50 crores, 250 crores and 750 crores respectively which
has been revised to Rs.20 crores, 100 crores, 500 crores and 1500
crores respectively, keeping in mind the export target growth to be
reached by the turn of the century and the fact that status holders
contribute between 60-70% of the country's total exports.

The infant industry argument is an economic reason for

protectionism. The crux of the argument is that nascent industries
often do not have the economies of scale that their older competitors
from other countries may have, and thus need to be protected until
they can attain similar economies of scale. It was first used by
Alexander Hamilton in 1790 and later by Friedrich List, in 1841, to
support protection for German manufacturing against British industry.

Contents
[hide]

• 1 Reasons for protectionism

• 2 Reasons against protectionism
• 3 Infant industry argument in popular culture

• 4 References

[edit] Reasons for protectionism

Protectionism allows an industry to develop until it is able to compete
in international trade. History provides numerous examples of the
benefits of protecting infant industries. In the 1830's the average tariff
of the USA was 40%, the highest in the world, allowing the
development of manufacturing industries until World War 2 when the
manufacturing supremacy of the States was absolute. More recently in
1939 Japan kicked out General Motors to protect Toyota which at the
time was uncompetitive in the global market. The economic miracle of
Taiwan has occurred with a state sector one and a half times the world
average. [1]

[edit] Reasons against protectionism

Infant industries are by definition those that are not strong enough to
survive open competition — they are dependent on government
largesse and protectionism in order to survive. At a given point in time,
protectionist policy, along with inefficient industries leads to higher
prices and lower quality goods for the consumer than if the good or
service produced by the industry was produced on the international
market.
For these reasons the infant industry argument is often criticized.
Firstly it is hard for government to know which industries will ultimately
turn out to have growth potential. A lack of domestic capacity or
unforeseen emergence of (even more superior) foreign rivals may, in
fact, prohibit industries from becoming competitive in the long run. It is
often the case that rather than developing or innovating, the protected
industry becomes complacent, due to a lack of competition from the
international market.
Since countries that put up barriers to imports will often face
retaliatory barriers to exports, protectionism could hurt certain infant
industries because the size of their potential market would be smaller.

[edit] Infant industry argument in popular

culture
A Thomas Nast cartoon was showing the Democrats wanting to do
away with protective tariffs. Nast appeared to make his cartoon against
protectionism. A "Democrat donkey" is seen looking furiously at a
rolled-up bill, which is dressed in a head covering and made to look like
a nanny. The "nanny bill" is seen holding a full grown man marked with
"infant industries", and exclaims to the donkey "Brute! Would you
strike me with the child in my arms?" The point of this cartoon,
particularly with an adult male marked "infant industries", was that the
"infancy" of these industries has matured to a point where they no
longer require protection.