POG 100: Introduction to Politics and Governance, Section 1/2/3/4 Fall 2007

Lecture: Nove !er 20 2007

November 20 2007
"evie#: Glo!al Governance and $orld Order International Politics and "elations International Or%ani&ations International Financial institutions Glo!ali&ation

Question
Should the Toronto District School Board establish Black focused schools?

Revie ! "lobal #overnance and orld order

*( 2( 1( 5(

Re$resents the level of #overnance about the state Throu#h histor%& there have been three 'and no increasin#l% four( reco#ni)ed s%stems of #lobal #overnance or orld orders
Relatin# to im$erial orders such as! +a, Romana- +a, Britannica and +a, .mericana Relatin# to balance of $o er such as the /est$halian order hich led to the emer#ence of soverei#n nation states '0oncert s%stem( Relatin# to a#reed u$on arran#ements of sharin# of $o er as ould be the case in re#ional arran#ements such as the 2uro$ean 3nion or the creation of the 3nited States of .merica '4ederalism( "lobali)ation 6 the $ost cold ar inte#ration of societies on a #lobal scale throu#h economic& $olitical and cultural im$eratives

Revie ! .$$roaches to international $olitics

There are com$etin# a$$roaches to international $olitics *( The Realist .$$roach 6 +o er $olitics and the stru##le for $o er 2( The 7iberal a$$roach 6 +rocess& ethics and 0oo$eration amon# nations 1( The 8ar,ist a$$roach 6 0onflict arisin# from une9ual orld econom% 5( :nternational +olitical 2conom% 6 inte#rated $olitical6economic focus ;uman Securit% < safet% from violent and non6violent threat North South divide < #lobal economic a$artheid! 77= of #lobal $o$ulation live in the #lobal South but have *>?>= of #lobal #ross national $roduct 2nvironmental #lobalism < 2colo#ical crisis occur at a #lobal level? 0onference on climate chan#e in 8ontreal be#ins toda%

Revie ! :nternational +olitics

International 'olitics hel$s us stud% the $olitical nature of relations on the international or #lobal level? :t is about the mutual relationshi$s of t o or more actors at the international level? :t is assumed that these relations occur ithin an international s(ste & a s%stem of states& but also non6state actors such as international non6#overnmental or#ani)ations& terrorist or#ani)ations& etc? International relations re$resents the stud% of relations amon# states :n common usa#e& it is interchan#eable ith international $olitics Forei%n 'olic( is a sub6set of international relations focusin# on the formal relationshi$s states have in their e,ternal environment? 4orei#n $olic% is concern ith the le#alistic& structures of states@ relationshi$s in the international s%stem

:nternational Relations
:n modern times& international relations has been about seekin# a%s to ensure securit% and kee$in# the $eace? The various re#imes that emer#e ithin the orld order can onl% $ersist to the e,tent that the% $romise to address structural anarch% and deliver order and securit% The orld is often divided bet een 2ast and /est& North and South& hile states are in conflict ith each other and often #o to ar ith each other to assert their interests The State is the central institution and most im$ortant actor in international relations :t is the $rimar% unit o) anal(sis and state soverei%nt( and self6determination are crucial to maintainin# international order and international la#

:nternational S%stem
Re$resents a s(ste o) states ith re#ulari)ed relations& coverin# all the nation6states of the orld The s%stem is both a $olitical and economic e,$ression of the idea that at an% time& the orld is connected under a orld order The international s(ste determines the abilit% of states to achieve their #oals The units of the international s%stems are both states based on their relative 'o#er in the s%stem and non6state actors such as N"As& TN0s? :t also involves su!*s(ste s or re#ional #rou$in#s of states? Be% structures include the 3nited Nations '3NA(& the 2uro$ean 3nion '23(& The 0ommon ealth& the Ar#ani)ation of .merican States 'A.S(& the .ssociation of South 2ast .sian Nations '.S2.N(& the Ar#ani)ation of .frican 3nit% 'A.3(& North .tlantic Treat% Ar#ani)ations 'N.TA(& N.4T.& .+20& etc

International Institutions
International organizations (IOs) have emerged as the architecture of world orders. These include international governmental organizations as well as international nongovernmental organizations After world war I the League of Nations was created to coordinate transnational security After WWII, key structures emerged including:
United Nations Organizations (UNO) The Bretton Woods System (BWS)

IDRB (World Bank) IMF

G+,, and $orld ,rade Or%ani&ation

United Nations Organizations (UNO)

The United Nation emerged as an international regime of governance to maintain world order in the post war period and coordinate international cooperation in the following areas: Securit% 2conomic +olitical 0ultural

3NA S%stem
"eneral .ssembl% Securit% 0ouncil 2conomic and Social 0ouncil :nternational 0ourt of Custice Trusteeshi$ 0ouncil 3NA S%stem .#encies

Some 3NA .#encies

3N0T.D 6 3N 0onference on Trade and Develo$ment 3N2+ 6 3N 2nvironmental +ro#ram 3N6;abitat 6 3N ;uman Settlement $ro#ram 3N;0R 6 3N ;i#h 0ommission for Refu#ees 3ND+ 6 3N Develo$ment +ro#ram 3N:428 6 3N Develo$ment 4und for /omen 3N:024 6 3N 0hildren@s 4und 3N4+. 6 3N +o$ulation 4und /4+ 6 /orld 4ood +ro#ram 3NR/. 6 3N Relief and /orks .#enc% for +alestinian
Refu#ees

The Bretton Woods System (BWS)

:nternational Bank for Reconstruction and Develo$ment '/orld Bank( :nternational 8onetar% 4und ':84( "eneral .#reement on Tariffs and Trade

The Bretton Woods System (BWS) Objectives

stable exchange rates A reserve asset (something like the gold standard) Control international capital flows Availability of short-term loans to deal with temporary balance of payments difficulties Rules to open up trade.

-andate o) t.e $orld /an0 1I/"23

The stated objectives of the World Bank (International Bank for Reconstruction and Development) were: to assist in the reconstruction of the global infrastructure destroyed by the war, to facilitate the development of the emerging, newly independent, underdeveloped countries (an objective that at the time was secondary to the first one in priority).

-andate o) t.e International -onetar( Fund 1I-F3

The stated objectives of the IMF were: to promote and maintain high levels of employment and income through the expansion of international trade the maintenance of exchange rate stability and currency convertibility

-andates o) $orld /an0 and I-F

. ke% unstated mandate for both institutions as the inte#ration of countries into the ca$italist orld econom%?

Aver the $ast five decades of the e,istence of the /orld Bank and the :84& this obCective seems to have become the most dominant one?

$orld /an0
The most relevant of the World Banks two branches to the Third world was therefore the IDA, which, like the IBRD was involved in providing long term low interest rate loans for development and reconstruction. Third World countries had originally proposed the setting up of a Special United Nations Fund for Development (SUNFED) in the 1950s. It would give them more control over the fund because of their numerical clout within the UN Industrialized countries insisted on the creation of the IDA under the World Bank which they had almost total control over. The IDA is an affiliate of the World Bank, not an agency of the UNO. They also established the Inter-American Development Bank, the Asian Development Bank and the African Development Bank, all governed on the basis of the contributions as opposed to membership.

$orld /an0
The World Bank is structured along the lines of a corporation, with member countries holding shares as the basis for the Banks capitalization. They make a nominal cash payment in line with the shares they hold and are given promissory notes for it. The capital is used as the base endowment for the Bank to lever private capital from capital markets, which it then uses to issue long-term loans at rates of interest below the market rates.

International Monetary Fund

The IMF structure is organized more like a credit union, in which members contribute funds (in gold or convertible national currency) of amounts determined by the size of their economy They can borrow from the accumulated amount to respond to threats to their ability to maintain their rate of exchange. The original monetary system designated the US dollar, backed by gold as the anchor currency against which all other currencies values were determined. IMF loans were principally intended to provide borrowers funds to deal with short term imbalances in their current accounts.

International Monetary Fund

The loans generally have short term maturity and carry conditions for the borrower to make some adjustments to their economy to enable them to return to a stable position. If a members situation can not be fixed by those measures, the IMF would agree to permanent currency exchange rate changes devaluation. In the early days, it was industrialized countries that were the primary borrowers. That changed after the debt crisis in the early 1980s. The United States was the largest contributor and subscriber so it held the largest votes at both organizations.

International Monetary Fund

The IMF now has 183 member states whose contributions of members, each with a quota in proportion to the size of its economy, finance its activities. The size of each national quota determines voting rights and the 24-member Executive Board, whose members are called Executive Directors. Each countrys vote is proportional to its quota. 8 Executive Directors for the largest economies represent only their own countries. The other 16 each represent all other countries, including some Third World countries. A majority of 85% is required for most decisions, so the vote of the U.S. at about 18%, is an effective veto power over critical decisions. However, even with loans that require a simple majority, the US is able to exercize inordinate influence

General Agreement on Tariffs and Trade (GATT)

As a forum for trade talks, the GATT was the site of a series of rounds of multilateral trade negotiations that aimed at the elimination of tariff barriers, which enjoyed great, but intermittent, success. The guiding principles of the GATT were to facilitate multilateral trade bargaining, with most favoured nation status, non-discriminatory access to markets and other concessions granted to the countries agreeing to play by the same rules and procedures set.

The GATT
It also served as an agency for resolving disputes and upholding trade rules, but was slow and impotent because it lacked of real powers to enforce its rulings, depending on the nations self interest. Initially, the plan was to establish the ITO to negotiate commodity agreements. But the failure to get the US Congress to approve it led to the establishment of the GATT in 1948 to organize rounds of negotiations aimed at liberalization of trade such as the Tokyo and the Uruguay rounds.

Fro

G+,, to $,O

1) Following the last (so-called Uruguay) round (1986-94), GATT was replaced by the WTO at the beginning of January 1995. 1) In addition to doing what GATT did, provide a forum for negotiations and handling trade disputes, the WTO is new in many ways.

/orld Trade Ar#ani)ation

The WTO is the most important regulator of trade at international level today and also sets the terms within which regional trade agreements can be signed. The impact of the World Trade Organization (WTO), established in 1995, had gone largely unnoticed until Seattle 1999. Trade is an important aspect of the current wave of globalization and its influence is felt from the global level to peoples' daily lives. According to the proponents of the WTO, globalization needs to be managed at world level from a trade perspective.

/orld Trade Ar#ani)ation

The WTO covers all areas of trade, not just manufactured goods, but services and intellectual property as well. Whereas the GATT was virtually toothless when it came to enforcement powers, a first objective of the WTO is administering WTO trade agreements and monitoring national trade policies. What this means is that an organization like the WTO which is not internally democratic, is able to override or change democratically approved national trading laws

/orld Trade Ar#ani)ation

The result of trade negotiations in services (General Agreement on Trades in Services (GATS) has been to put pressure on governments to privatize what have historically been public services such as the delivery of water. In many countries in the Third World, the World Bank has made the privatization of water delivery a condition of its continued financial support for the government. The result of trade negotiations on intellectual property (Trade-Related Aspects of Intellectual Property (TRIPs) have led to billions of dollars of monopoly profits being transferred worldwide from poor countries to rich countries under the guise of protecting the property rights of inventors and developers. E.G. HIV/AIDS Drugs

$orld ,rade Or%ani&ation

In 1997, the WTO reported that world trade in goods reached $ 5.3 trillion, and trade in services an additional $ 1.3 trillion. The United Nations Conference on Trade and Development (UNCTAD) figures indicate that: more than two thirds of world trade involves at least one multinational, much of it within the same multinational around the world (intra-firm exports) with an estimated $7 trillion in global sales in 1995 - the value of goods and services produced by some 280,000 affiliates of the world's 44,508 TNCs - international production outweighs exports as the dominant mode of servicing foreign markets TNCs were responsible for the $ 350 billion in foreign direct investment in 1995.

The problem with the distribution of trade benefits

The WTO's basic assumption is that its rules contribute to trade and investment liberalization which leads to more competition, better allocation of resources, economic growth, more employment and better living standards, including environmental conservation. Although the WTO, and GATT in the past, have incorporated special measures for weaker economies, there are many pitfalls in the current system

Unequal distribution of the benefits of trade

Inequalities between skilled and unskilled workers are growing in the North as well as in the South; Corporate restructuring, labour shedding and wage repression are on the rise; Profit shares and the return on capital has risen much more (from 12.5% in the early 1980s to 16% in the mid 1990s in G7 countries ) than wages; The concentration of revenues and higher company profits have not been invested so as to create more jobs; The benefits of liberalization have been mainly reaped by traders rather than by farmers who have not received

7ife and Debt

.ccordin# to the film 7ife and Debt& in hat a% has the intervention of the /orld Bank and the :84 facilitated the $rocess of #lobali)ation? +re$are not more than a one $a#e res$onse to the above 9uestion?