3 - The institutional framework

Summary

This chapter looks briefly at the major international institutions which create the framework for world trade: the International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO). Although in the case of all three institutions the negotiations and agreements are made between nation states, there is considerable evidence that the negotiations are driven by what is perceived to be for the benefit of transnational corporations (TNCs), in particular because the most powerful nation, the USA, has consistently pressed for outcomes which benefit their giant corporations. The most obvious example is the Trade Related Intellectual Property (TRIPS) Agreement which was extremely beneficial for big pharmaceutical companies, but there are numerous other examples, including the absence of real progress on agricultural issues, the World Bank's insistence on large infrastructure projects which can only be undertaken by the multinationals and the assistance rendered to the large private banks by IMF bail-outs of countries in crisis. There are many other significant organisations involved in the international trading system. Space does not permit a study of them here. This chapter deals briefly with the role of the three institutions and then seeks to show how complex their operations in international finance and trade actually are. In particular, these case studies seek to show how impossible it is to trivialise or sloganise international trade issues and come up with simple solutions. It also seeks to show that actions by the international financial institutions (IFIs) may have far-reaching and sometimes unexpected effects.