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International trade has intensified significantly in recent decades, in particular, due to the general process of globalisation. Little by little, international trade accelerated but became organised and structured. International and global institutions have been created, set up, and developed in order to be able to better regulate international trade. In less than a century, trade has exploded and increased exponentially. They have also greatly diversified and are now very different from what they were in the 1950s. Little by little, trade focused less and less on raw materials and basic necessities and more and more on goods from the tertiary sector, manufactured goods, and services. International trade was multiplied by 20 between 1950 and 2010. From now on, trade is now more capital-intensive than trade in goods. The vast majority of international trade is carried out by members of the Triad. A large part of international trade is carried out regionally, and the creation of regional areas such as the European Union, NAFTA, MERCOSUR, or ASEAN demonstrates this desire to structure regional trade.
We will begin by presenting these different institutions, from their creation to their current role. Some roles are indeed very different today from what they were when these institutions were created.
Finally, we will talk about the developments expected for these institutions.
Among these institutions are the IMF, the International Development Bank, and the GATT agreements, which later became the WTO. The first international exchanges mainly concerned European countries.
The World Trade Organization (WTO) is an organisation created in 1995 as a follow-up to the General Agreement on Tariffs, GATT. Its objective is to accelerate the liberalisation and expansion of international trade in goods and services. Its ambition is to put in place common rules for all its members and check the settlement of disputes between countries. Member countries commit to agreements on the maximum customs duties to be applied. The objective is to facilitate, streamline and liberalise exchanges between members.
Finally, these three institutions have entered into essential cooperation agreements with each other, so as to guarantee optimal functioning and limit the risk of disputes between institutions.
Most international institutions emerged in the post-war years and have since undergone many changes. The WTO, for example, succeeded the GATT in 1995, modernising and further liberalising trade.
The role of some of these institutions is increasingly criticised and even called into question. Nevertheless, an institution like the WTO justifies its role and its existence even today if the economic, social, and financial context is very different from what took place when it was created.
For example, some States still think they can free themselves from certain rules and founding principles of these institutions. This is the case, for example, of Donald Trump, who tried to enact additional taxes on steel and aluminium imports into the United States, leading to complaints at the WTO.
In any case, these institutions have largely fulfilled their role since their creation in 1944-1945. Even if they are sometimes criticised and decried, they have allowed the fluidification of exchanges, their liberalisation, the lowering of customs barriers, and the accompaniment of the explosion of international trade. This allowed the boom in growth that we experienced, in particular, during the postwar period. This function of reinsurance, supervision, support, and stimulation was pursued in the second half of the 20th century and also since the beginning of the 2000s. These institutions must continue to reinvent themselves and face new challenges, such as the dematerialisation of exchanges, the increase in capital exchanges and tertiary flows, but to the industrial relocations reinforced during the COVID-19 pandemic. They nevertheless remain necessary to limit excesses and economic wars between certain States, in particular, following the outbreak of the Russian-Ukrainian conflict in February 2022. The presence of these institutions serves as a sort of safeguard in a world where trade is numerous, diversified, global, and increasingly rapid and where liberalisation is now the keyword.
SOURCES
International Bank for Reconstruction and Development (IBRD) (worldbank.org)
WTO | Dispute Resolution Archives (wto.org)
Review sheet - What are the foundations of international trade and the internationalisation of production? - The Student Figaro
We will begin by presenting these different institutions, from their creation to their current role. Some roles are indeed very different today from what they were when these institutions were created.
Finally, we will talk about the developments expected for these institutions.
I. International trade institutions
Most international institutions were created just after the Second World War to facilitate trade and try to appease nations troubled by war. The major ambition was to pacify the agreement between the great States to try as much as possible to avoid a new world conflict.Among these institutions are the IMF, the International Development Bank, and the GATT agreements, which later became the WTO. The first international exchanges mainly concerned European countries.
A. The IMF
The International Monetary Fund is one of the oldest international institutions. It was created immediately following the Second World War following the Bretton Woods agreements and was created in 1945. It brings together 184 countries. Its main missions are to ensure international financial stability (in particular, by trying to act on exchange rates), but also to facilitate trade and imports/exports between member countries as well as possible.B. The IBRD
The International Bank for Reconstruction and Development is a kind of world bank. It was also created following the Second World War and the Bretton Woods agreements, and its main objective was to provide the affected countries with funds to help them rebuild after the damage of the war. It now has 189 member states. From now on, its ambition is to fight against poverty and to try to find solutions to allow a better distribution of wealth and resources. To do this, it provides loans, most often at zero interest, to certain Member States, to enable their development. It raises part of its resources on the international capital markets, borrows at very low cost, and lends to destination countries.C. GATT / WTO
The GATT agreements (or general agreements on customs tariffs) aim to streamline trade by regulating customs tariffs between States, aiming to achieve complete free trade between the Member States. Several stages of tariff reduction are planned. They are not strictly speaking an international institution but agreements with an international scope.The World Trade Organization (WTO) is an organisation created in 1995 as a follow-up to the General Agreement on Tariffs, GATT. Its objective is to accelerate the liberalisation and expansion of international trade in goods and services. Its ambition is to put in place common rules for all its members and check the settlement of disputes between countries. Member countries commit to agreements on the maximum customs duties to be applied. The objective is to facilitate, streamline and liberalise exchanges between members.
Finally, these three institutions have entered into essential cooperation agreements with each other, so as to guarantee optimal functioning and limit the risk of disputes between institutions.
II. Developments in international trade and its institutions
International trade continues to evolve, in volume, in value. Most international trade concerns intra-industry trade, i.e. trade involving the same sector of activity. Firms are now most often transnational, and product differentiation pushes them to launch various products in the same product branch. Finally, the search for economies of scale encourages them to develop, through their initial product range, in various markets.Most international institutions emerged in the post-war years and have since undergone many changes. The WTO, for example, succeeded the GATT in 1995, modernising and further liberalising trade.
The role of some of these institutions is increasingly criticised and even called into question. Nevertheless, an institution like the WTO justifies its role and its existence even today if the economic, social, and financial context is very different from what took place when it was created.
For example, some States still think they can free themselves from certain rules and founding principles of these institutions. This is the case, for example, of Donald Trump, who tried to enact additional taxes on steel and aluminium imports into the United States, leading to complaints at the WTO.
In any case, these institutions have largely fulfilled their role since their creation in 1944-1945. Even if they are sometimes criticised and decried, they have allowed the fluidification of exchanges, their liberalisation, the lowering of customs barriers, and the accompaniment of the explosion of international trade. This allowed the boom in growth that we experienced, in particular, during the postwar period. This function of reinsurance, supervision, support, and stimulation was pursued in the second half of the 20th century and also since the beginning of the 2000s. These institutions must continue to reinvent themselves and face new challenges, such as the dematerialisation of exchanges, the increase in capital exchanges and tertiary flows, but to the industrial relocations reinforced during the COVID-19 pandemic. They nevertheless remain necessary to limit excesses and economic wars between certain States, in particular, following the outbreak of the Russian-Ukrainian conflict in February 2022. The presence of these institutions serves as a sort of safeguard in a world where trade is numerous, diversified, global, and increasingly rapid and where liberalisation is now the keyword.
SOURCES
International Bank for Reconstruction and Development (IBRD) (worldbank.org)
WTO | Dispute Resolution Archives (wto.org)
Review sheet - What are the foundations of international trade and the internationalisation of production? - The Student Figaro
