ITERNATIONAL INSTITUIONS

1. WTO
The World Trade Organisation (WTO) Agreement creates an international trade legal
framework for 166 economies globally and is in charge of around 60 different
agreements with the characteristics of international legal agreements. The WTO
agreements are known as the WTO’s trade rules, and the WTO is called a “rules-based”
system. These agreements encompass various aspects such as goods, services, intellectual
property, standards, investment, and other factors that influence the movement of
international trade.

 TRIPS
The Agreement on Trade-Related Aspects of Intellectual Property Rights is an
international agreement that establishes minimum standards for how national
governments regulate intellectual property (IP). It's considered one of the three pillars of
the WTO, along with trade in goods and trade in services.

 TRIMS
The Agreement on Trade-Related Investment Measures is an agreement that prohibits
certain trade-related investment measures that restrict or distort trade. It applies to all
WTO members and came into effect in 1995.

 GATT
The General Agreement on Tariffs and Trade is an agreement that covers trade in
goods. The TRIPS Agreement was negotiated at the end of the Uruguay Round of GATT
between 1989 and 1990.

Principles of WTO
The World Trade Organization (WTO) operates on a set of core principles that guide
international trade and its regulations. These principles ensure that trade flows smoothly,
predictably, and as freely as possible across its 164 member countries. Here are the key
principles of the WTO:
1. Non-Discrimination
 Most-Favored Nation (MFN): Countries must treat all WTO members equally.
This means that if a country offers a trade benefit to one member, it must offer the
same benefit to all members.
 National Treatment: Imported goods must be treated the same as domestically
produced goods once they enter the market, ensuring no discrimination between
foreign and domestic goods.

2. Reciprocity
 Members should reciprocate when one country lowers its trade barriers, fostering
balanced concessions. This principle aims to reduce trade barriers and prevent
 countries from benefiting without offering something in return.

3. Transparency
 WTO members must publish their trade regulations and maintain transparency by
notifying the WTO of any significant changes. This helps to prevent sudden and
unpredictable changes in trade policies that could disrupt trade flows.

4. Binding and Enforceable Commitments

 WTO members commit to keeping their tariffs and trade barriers within agreed
limits. If they wish to raise a tariff above these limits, they must negotiate with
affected countries, often with compensation to maintain a balance.

5. Safety Valves and Flexibility

 The WTO provides mechanisms, like safeguard measures, to protect economies in
cases of unforeseen surges in imports or economic crises. These mechanisms
allow temporary restrictions to manage these situations without undermining
overall free trade principles.

6. Development and Economic Reform

 The WTO recognizes that developing countries may need special consideration,
such as longer transition periods to implement agreements and trade barriers, or
more flexibility in trade measures.

7. Sustainability and Environmental Protection

 Although not explicitly a founding principle, the WTO increasingly emphasizes
the importance of sustainable and environmentally friendly trade practices,
balancing trade growth with the need to protect the environment.

The principles help to promote a fair, predictable, and transparent trading system, with
the goal of increasing global economic growth and development while respecting the
needs of all member countries.

Objectives of WTO
1. Establishing and Enforcing Rules for International Trade
The international trading rules by the World Trade Organisation are established under
three separate agreements – rules relating to the international trade in goods; the
agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and the
General Agreement on Trade in Services (GATS).

The enforcement of rules by the WTO takes place by way of a multilateral system of
disputes settlement in the instances of violation of trade rules by member countries. The
members are obligated under ratified agreements to honor and abide by the procedures
and judgments.

2. Acting As A Global Apex Forum

World Trade organization is the global forum for monitoring and negotiating further trade
liberalization. The premise of trade liberalization measures undertaken by WTO is based
on the benefits of member countries to optimally utilize the position of comparative
advantage due to a free and fair trade regime.

3. Resolution Of Trade Disputes

Trade disputes, before the WTO, usually arise out of deviation from agreements between
member countries. The resolution of such trade disputes does not take place unilaterally
but through a multilateral system involving set rules and procedures before the dispute
settlement body.

4. Increasing Transparency in The Decision-Making Process

The World Trade Organisation attempts to increase transparency in the decision-making
process by way of more participation in the decision-making and consensus rule, in
particular. The combined effect of such measures helps to develop institutional
transparency.

5. Collaboration Between International Economic Institutions

The global economic institutions include the World Trade Organisation, the International
Monetary Fund, the United Nations Conference on Trade and Development, and the
World Bank.
With the advent of globalization, close cooperation has become necessary between
multilateral institutions. These institutions are functional in the sector of formulation and
implementation of a global economic policy framework. In the absence of regular
consultation and mutual cooperation, policymaking may be disrupted.

6. Safeguarding The Trading Interest of Developing Countries

Stringent regulations are implemented by the WTO to protect the trading interests of
developing countries. It supports such member countries to leverage the capacity for
carrying out the mandates of the organization, managing disputes, and implementing
relevant technical standards.

Roles and Functions of WTO

The broad reach of WTO and its functions have been mentioned below.
 Implementation of Rules for Review of Trade Policy
The international rules of trade provide stability and assurance and lead to a general
consensus among member countries. The policies are reviewed to ensure that even with
the ever-changing trading scenarios, the multilateral trading system thrives. It also helps
in the facilitation of a transparent and stable framework for conducting business.
 Forum for Member Countries Discuss Future Strategies
The WTO, as a forum, allows for trade negotiations in the multilateral trading system. In
the absence of trade negotiations, growth may stunt, and issues related to tariff and
dumping may go unaddressed. Further liberalization of trade is also subject to consistent
trade negotiations.
 Implementing and Administering Bilateral and Multilateral Trade
Agreements
The bilateral or multilateral trade agreements have to be necessarily ratified by the
parliaments of respective member countries. Unless such ratification comes through, the
non-discriminatory trading system cannot be put into practice. The executed agreements
will ensure that every member is guaranteed to be treated fairly in other members’
markets.
 Trade Dispute Settlement
The dispute settlement by the WTO is concerned with the resolution of trade disputes.
Independent experts of the tribunal interpret the agreements and give out judgment
mentioning the due commitments of the concerned member states. It is encouraged to
settle the disputes by way of consultation among the members as well.
 Optimal Utilization of the World's Resources
Resources across the world can be further optimally utilized by harnessing the trade
capacities of the developing economies. It requires special provisions in the WTO
agreements for the least-developed economies. Such measures may include providing
greater trading opportunities, longer duration to implement commitments, and also
support to build the sue infrastructure.

2. UNCAD
The United Nations Conference on Trade and Development (UNCTAD) was established
in 1964 as a permanent intergovernmental body within the United Nations. It aims to
support developing countries in accessing the benefits of a globalized economy more
fairly and to reduce inequality in international trade, finance, and investment.

1. Objectives and Purpose

 UNCTAD’s primary goal is to promote inclusive and sustainable economic
development, particularly focusing on developing countries.
 It works to integrate developing countries into the global economy on equitable
terms, reduce poverty, and ensure that globalization benefits all.
 UNCTAD serves as a think tank, providing research, policy advice, and technical
assistance on various economic development issues.

2. Functions
 Research and Analysis: UNCTAD conducts in-depth studies and reports, such as
the World Investment Report, Trade and Development Report, and Digital
Economy Report, which offer insights into global economic trends, investment
patterns, and emerging issues.
 Policy Formulation: It advises developing countries on policy-making, helping
 them implement measures that can improve their trade and economic status.
 Technical Assistance: UNCTAD offers support in areas like trade negotiations,
debt management, and e-commerce to help countries develop practical skills and
institutional capacity.
 Consensus Building: UNCTAD provides a platform for dialogue among
governments to address economic challenges, balancing diverse interests and
finding common solutions.

3. Key Areas of Focus

 Trade: Promotes trade as a tool for development, focusing on market access, trade
agreements, and fair trade practices.
 Investment and Enterprise Development: Works on policies that encourage
investment flows to developing countries and support small and medium
enterprises (SMEs).
 Finance and Debt Management: Assists countries with strategies to manage debt
sustainably and provides debt analysis and financial advisory services.
 Technology and Innovation: Helps countries leverage new technologies for
development and addresses issues related to the digital divide and e-commerce.
 Sustainable Development Goals (SDGs): Aligns its work with the SDGs,
emphasizing poverty reduction, economic inclusivity, and sustainable economic
growth.

4. Major Programs and Initiatives

 Empretec Program: Supports entrepreneurship in developing countries by
providing training to small businesses and aspiring entrepreneurs.
 ASYCUDA (Automated System for Customs Data): A digital tool for
simplifying customs processes and improving trade efficiency in over 100
countries.
 Debt Management and Financial Analysis System (DMFAS): Assists
governments in managing their public debt to improve fiscal health and economic
stability.
 eTrade for All: A multi-stakeholder initiative to help developing countries
enhance their e-commerce capabilities and benefit from the digital economy.

5. Annual Conferences and Reports

 UNCTAD holds annual conferences, such as the UNCTAD Conference (held
every four years), which sets the organization's work program and provides a
platform for countries to discuss global economic challenges.
 Its annual reports, including the World Investment Report, Trade and Development
Report, and Digital Economy Report, provide data, analysis, and policy
recommendations on pressing economic issues.

6. Partnerships and Collaborations

  UNCTAD collaborates with other international organizations like the WTO, IMF,
and World Bank to align global economic policies and provide cohesive support to
developing countries.
 It also partners with regional organizations, civil society, academia, and the private
sector to expand its reach and impact.

7. Challenges and Criticisms

 UNCTAD faces challenges in securing adequate funding and resources, which
sometimes limit its impact.
 Critics argue that its recommendations can be overly idealistic or challenging to
implement in the face of political or economic constraints in member countries.
 Despite this, UNCTAD is recognized as a crucial advocate for developing
countries within the global economic system.

8. UNCTAD and the Future of Development

 With the rapid digitalization of the economy and increasing concerns about
sustainability, UNCTAD focuses on how digital trade, climate change, and
economic inequality impact developing countries.
 UNCTAD’s recent work highlights the need for equitable policies on global trade,
technology, and environmental protection as essential components of sustainable
development.

Overall, UNCTAD plays a key role in addressing the unique challenges faced by
developing countries, advocating for policy frameworks that can bridge economic
disparities in the global system.

3. International Monetary Fund (IMF)

The formation of the IMF was initiated in 1944 at the Bretton Woods Conference. IMF
came into operation on 27th December 1945 and is today an international organization
that consists of 189 member countries. Headquartered in Washington, D.C., IMF focuses
on fostering global monetary cooperation, securing financial stability, facilitating and
promoting international trade, employment, and economic growth around the world. The
IMF is a specialized agency of the United Nations.

Organizational Structure of International Monetary Fund (IMF)

The United Nations is the parent organization that handles the proper functioning and
administration of the IMF. The IMF is headed by a Managing Director who is elected by
the Executive Board for a 5-year term of office. The International Monetary Fund (IMF)
consists of the Board of Governors, Ministerial Committees, and the Executive Board.
Structure of the International Monetary Fund (IMF)
Governing Bodies of Roles and Responsibilities
IMF
Board of Governors  Each governor of the Board of Governors is appointed
by his/her respective member country.
 Elects or appoints executive directors to the Executive
Board.
 Board of Governors is advised by the International
Monetary and Financial Committee (IMFC) and the
Development Committee.
 An annual meet up between the Board of Governors
and the World Bank Group is conducted during the
IMF–World Bank Annual Meetings to discuss the
work of their respective institutions.
Ministerial Committees  It manages the international monetary and financial
1. International system.
Monetary and  Amendment of the Articles of Agreement.
Financial  To solve the issues in the developing countries that are
Committee (IMFC) related to economic development.
2. Development
Committee
Executive Board  It is a 24-member board that discusses all the aspects
of the Funds.
 The Board normally makes decisions based on
consensus, but sometimes formal votes are taken.

Objectives of the IMF

IMF was developed as an initiative to promote international monetary cooperation,
enable international trade, achieve financial stability, stimulate high employment,
diminish poverty in the world, and sustain economic growth. Initially, there were 29
countries with a goal of redoing the global payment system. Today, the organization has
189 members. The main objectives of the International Monetary Fund (IMF) are
mentioned below:
1. To improve and promote global monetary cooperation of the world.
2. To secure financial stability by eliminating or minimizing the exchange rate
stability.
3. To facilitate a balanced international trade.
4. To promote high employment through economic assistance and sustainable
economic growth.
5. To reduce poverty around the world.
What are the functions of the IMF?
IMF mainly focuses on supervising the international monetary system along with
providing credits to the member countries. The functions of the International Monetary
Fund can be categorized into three types:
1. Regulatory functions: IMF functions as a regulatory body and as per the rules of
the Articles of Agreement, it also focuses on administering a code of conduct for
exchange rate policies and restrictions on payments for current account
transactions.
2. Financial functions: IMF provides financial support and resources to the member
countries to meet short term and medium term Balance of Payments (BOP)
disequilibrium.
3. Consultative functions: IMF is a centre for international cooperation for the
member countries. It also acts as a source of counsel and technical assistance.

India & IMF

India is a founder member of the IMF. India’s Union Finance Minister is the Ex Officio
Governor on the IMF’s Board of Governors. Each member country also has an alternate
governor. The alternate governor for India is the Governor of the RBI. There is also an
Executive Director for India who represents the country at the IMF.
 India’s quota in the IMF is SDR 13,114.4 million that gives India a shareholding
of 2.76%. Read about the Special Drawing Rights – Created in 1969 by
International Monetary Fund (IMF) at the linked article.
 This makes India the eight largest quota holding country at the organization.
 In 2000, India completed the repayment of all the loans it had taken from the IMF.
 Now, India is a contributor to the IMF.
The emerging economies have gained more influence in the governance architecture of
the International Monetary Fund (IMF).
 The reforms were agreed upon by the then 188 members of the IMF in 2010, in
the aftermath of the global financial meltdown.
 More than six percent of the quota shares will shift to emerging and developing
countries from the U.S. and European countries.
Which countries gained?
 India’s voting rights increased to 2.63 percent from the current 2.3 percent, and
China’s to 6.08 percent from 3.8. Russia and Brazil are the other two countries
that gain from the reforms.
Why delay the reforms?
 Among the reasons for the delay has been the time it took the U.S Congress to
approve the changes.
 Though the country holds veto power, Republicans have been agitated over
“declining U.S power.”
4. World Bank: A Brief Overview

The World Bank, established in 1944 during the Bretton Woods Conference, is an
international financial institution that provides financial and technical assistance to
developing countries worldwide. Its primary mission is to reduce poverty and support
development by providing loans, grants, and expertise for various projects aimed at
improving economic growth and the standard of living in its member countries.

Objectives of the World Bank

1. Poverty Alleviation: The World Bank’s core focus is on eradicating extreme
poverty and promoting shared prosperity.
2. Economic Development: It funds projects that foster sustainable economic
growth in developing countries.
3. Infrastructure Development: Supports projects related to transportation, energy,
water supply, and sanitation to enhance infrastructure.
4. Human Capital Development: Emphasis on education, healthcare, and skill
development to empower communities.

Structure of the World Bank Group

The World Bank Group comprises five organizations that collectively address different
aspects of global development:
1. International Bank for Reconstruction and Development (IBRD): Provides
loans to middle-income and creditworthy low-income countries.
2. International Development Association (IDA): Offers concessional loans and
grants to the poorest countries.
3. International Finance Corporation (IFC): Supports private sector development
through investment and advisory services.
4. Multilateral Investment Guarantee Agency (MIGA): Provides guarantees to
investors and lenders to encourage foreign direct investment.
5. International Centre for Settlement of Investment Disputes (ICSID):
Facilitates arbitration and resolution of disputes between international investors
and states.

Functions of the World Bank

1. Funding Development Projects: Provides financial resources for projects in
sectors like education, health, agriculture, and infrastructure.
2. Technical Assistance and Policy Advice: Offers expert guidance to help
countries implement reforms and enhance institutional capacity.
3. Promoting Trade and Investment: Encourages open markets and foreign
investments in developing countries.
4. Disaster Response: Provides emergency funding to help countries recover from
natural disasters, conflicts, or pandemics.
Key Initiatives and Programs
The World Bank has spearheaded several programs to achieve its goals:
1. Global Partnership for Education (GPE): Supports education in developing
countries.
2. Climate Change Action Plan: Aims to reduce carbon emissions and promote
sustainable development.
3. International Development Goals: Works toward achieving the United Nations'
Sustainable Development Goals (SDGs), such as clean water and quality
education.

Criticism of the World Bank

Despite its contributions, the World Bank has faced criticism on several fronts:
1. Policy Conditionality: Often imposes strict conditions, such as economic reforms,
which may adversely impact local economies.
2. Environmental Concerns: Some projects funded by the World Bank have faced
backlash for environmental degradation.
3. Inequality: Critics argue that its policies sometimes widen economic disparities in
borrowing nations.
4. Debt Burden: Loans with high-interest rates can exacerbate the financial
challenges of low-income countries.

Conclusion
The World Bank plays a pivotal role in addressing global development challenges and
fostering economic growth in developing nations. While it has faced criticism, its
initiatives have made significant contributions toward poverty reduction, infrastructure
development, and sustainable growth. Continuous reform and adaptation are essential for
the World Bank to remain relevant and effective in meeting the evolving needs of the
global economy.

5. United Nations Organization (UNO)

The United Nations Organization (UNO), established on 24th October 1945, is an
international organization created to promote peace, security, and cooperation among
nations following the devastation of World War II. It replaced the League of Nations and
currently consists of 193 member states, making it the most inclusive international body.
Its headquarters is in New York City, USA.

Objectives of the UNO

1. Maintain International Peace and Security: The UNO aims to prevent conflicts,
resolve disputes, and maintain global stability.
2. Promote Friendly Relations Among Nations: It encourages cooperation based
on equal rights and self-determination of people.
3. Foster International Cooperation: The UNO focuses on solving global issues
 related to economics, social development, culture, and human rights.
4. Protect Human Rights: It works to uphold universal human rights and freedoms.
5. Promote Sustainable Development: The UNO champions the achievement of the
Sustainable Development Goals (SDGs).

Principal Organs of the UNO

The UNO functions through its six principal organs, each with specific roles:
1. General Assembly: The main deliberative body where all member states have
equal representation.
2. Security Council: Responsible for maintaining international peace and security,
consisting of 15 members (5 permanent and 10 non-permanent).
3. Economic and Social Council (ECOSOC): Coordinates economic, social, and
environmental efforts of the UN and its specialized agencies.
4. International Court of Justice (ICJ): Settles legal disputes between states and
provides advisory opinions on international legal issues.
5. Trusteeship Council: Initially established to oversee trust territories, its
operations have been suspended as all trust territories gained independence.
6. Secretariat: Provides administrative and logistical support to the UN's programs,
headed by the Secretary-General.

Specialized Agencies of the UNO

The UN works with several specialized agencies to address specific global challenges:
1. World Health Organization (WHO): Focuses on global public health.
2. United Nations Educational, Scientific and Cultural Organization
(UNESCO): Promotes education, science, and culture.
3. International Monetary Fund (IMF) and World Bank: Support global financial
stability and development.
4. Food and Agriculture Organization (FAO): Works to eradicate hunger and
ensure food security.

Achievements of the UNO

1. Peacekeeping Missions: Successfully intervened in conflict zones like Kosovo,
Sierra Leone, and Liberia.
2. Humanitarian Aid: Provides relief during natural disasters and conflicts, such as
efforts by the World Food Programme (WFP).
3. Global Health Campaigns: Played a key role in eradicating smallpox and
addressing global pandemics.
4. Climate Action: Facilitates international agreements like the Paris Agreement to
combat climate change.
5. Universal Declaration of Human Rights: Established a global framework for
human rights protection.
Challenges Faced by the UNO
1. Political Gridlock in the Security Council: Disagreements among permanent
members often hinder decisive action.
2. Funding Issues: The UN heavily relies on member contributions, and delays or
non-payment by major contributors affect its operations.
3. Limited Enforcement Powers: The UN often struggles to enforce resolutions or
ensure compliance by member states.
4. Rising Global Issues: Challenges like terrorism, cybercrime, and climate change
require more innovative and unified approaches.

Conclusion
The UNO has been instrumental in fostering global cooperation and addressing
worldwide issues, making significant contributions toward peace, development, and
human rights. While challenges persist, reforms and stronger global collaboration can
enhance its effectiveness in tackling contemporary global problems. As a symbol of hope
and unity, the UNO continues to strive toward creating a better and more sustainable
future for all humanity.

6. Generalized System of Preferences (GSP):

The Generalized System of Preferences (GSP) is a trade policy framework designed to
promote economic growth in developing countries by providing preferential access to the
markets of developed nations. It was introduced by the United Nations Conference on
Trade and Development (UNCTAD) in 1971 as part of its broader agenda to integrate
developing economies into the global trading system. By offering reduced tariffs or duty-
free treatment on certain exports from beneficiary countries, the GSP fosters
industrialization, job creation, and economic development in these nations.

Objectives of GSP
The primary aim of the GSP is to promote economic development in low- and middle-
income countries by improving their access to markets in industrialized nations. Specific
objectives include:
1. Boosting Export Competitiveness: By offering tariff concessions, GSP programs
enhance the competitiveness of exports from developing countries, enabling them
to compete with products from more developed economies.

2. Economic Diversification: Encouraging the production and export of non-

traditional goods fosters diversification away from reliance on a narrow range of
exports, such as raw materials.

3. Poverty Alleviation and Job Creation: Increased trade under GSP programs
generates employment and raises income levels in beneficiary countries.

4. Promoting Sustainable Development: Some GSP programs link trade

 preferences to compliance with environmental and labor standards, incentivizing
sustainable practices.

Structure and Mechanism of GSP

Key Features of GSP Programs
 Beneficiary Countries: GSP programs typically target low- and lower-middle-
income countries, as defined by international benchmarks such as the World Bank
income classifications.

 Eligible Products: A wide range of products, including agricultural goods,

textiles, and manufactured items, are covered under GSP schemes. Some programs
exclude sensitive goods to protect domestic industries.

 Preferential Treatment: Preferential tariffs can include full duty exemption

(duty-free treatment) or partial reduction of tariffs compared to the Most Favored
Nation (MFN) rates under WTO rules.

Implementation
 Unilateral Basis: GSP programs are typically implemented unilaterally by
developed countries, meaning beneficiaries do not have to offer reciprocal
benefits.

 Rules of Origin: Beneficiary countries must meet specific rules of origin (ROO)
requirements to qualify for preferential treatment. These rules ensure that
substantial transformation of goods occurs in the exporting country.

 Graduation Mechanism: As countries achieve higher levels of economic

development or export competitiveness, they may "graduate" out of the GSP
scheme, losing access to preferential tariffs.

Impact of GSP Programs

For Beneficiary Countries
 Economic Benefits: GSP has enabled many countries to integrate into global
value chains, boosting exports and foreign exchange earnings.
 Industrial Development: Preferential market access incentivizes investment in
manufacturing and export-oriented industries.
 Social Improvements: Increased employment opportunities contribute to poverty
reduction and improved living standards.
For Donor Countries
 Strengthened Trade Relationships: GSP fosters goodwill and economic ties with
beneficiary countries.
 Market Diversification: Encouraging imports from developing economies
provides consumers in donor countries with a wider range of affordable goods.
Challenges and Criticisms
1. Unpredictability: GSP programs are often subject to unilateral changes,
suspension, or non-renewal, creating uncertainty for exporters.
2. Limited Product Coverage: Many schemes exclude key exports like textiles,
which are critical for developing countries.
3. Stringent Rules of Origin: Complex requirements can deter beneficiary countries
from fully utilizing GSP benefits.
4. Graduation: While graduation reflects economic progress, it can disrupt trade
flows for countries reliant on preferential access.
5. Conditionality: Linking GSP benefits to compliance with environmental, labor, or
governance standards can be viewed as coercive or overly stringent for countries
with limited resources.

Reforms and the Way Forward

To maximize the effectiveness of GSP programs, reforms could focus on:
 Expanding Product Coverage: Including sensitive products like textiles to better
support beneficiary economies.
 Simplifying Rules of Origin: Reducing administrative burdens to enhance
utilization rates.
 Providing Technical Assistance: Supporting beneficiary countries in meeting
standards and improving their export capabilities.
 Predictability and Longevity: Ensuring stability by adopting longer-term renewal
mechanisms for GSP schemes.

Conclusion
The Generalized System of Preferences remains a vital instrument for promoting global
trade equity and fostering economic development in less-developed nations. While its
effectiveness is tempered by challenges such as limited coverage and stringent
conditionality, ongoing reforms and multilateral dialogue offer pathways to enhance its
impact. By balancing the interests of beneficiary and donor nations, the GSP can continue
to play a pivotal role in building an inclusive and sustainable global economy.

7. International Commodity Agreement

International Commodity Agreements (ICAs) are intergovernmental agreements designed

to stabilize the international trade, supply, and prices of a specific commodity. These
agreements typically involve a consensus among producing and consuming countries on
various aspects, including:
 Quantities Traded: Setting limits on the volume of the commodity that can be
exported or imported by participating countries.
 Prices: Establishing price floors and ceilings to prevent extreme price
fluctuations.
  Stock Management: Implementing mechanisms to manage global stocks of the
commodity to ensure supply stability.

Objectives of ICAs:
 Price Stabilization: Reducing price volatility, which can harm both producers and
consumers.
 Supply Security: Ensuring a steady and reliable supply of the commodity to
prevent shortages and disruptions.
 Fair Income Distribution: Protecting the livelihoods of producers, especially in
developing countries, by providing them with a fair and stable income.
 Market Orderliness: Promoting orderly market conditions and discouraging
speculative activities.

Mechanisms Used in ICAs:

 Export Quotas: Limiting the amount of a commodity that can be exported by
individual countries.
 Buffer Stocks: Maintaining a reserve stock of the commodity to be released
during periods of shortage or high prices.
 Production Controls: Regulating the production of the commodity to balance
supply and demand.
 International Commodity Organizations: Establishing dedicated organizations
to oversee the implementation of the agreement and coordinate the actions of
participating countries.

Challenges and Criticisms of ICAs:

 Enforcement Difficulties: Enforcing ICAs can be challenging, as countries may
have incentives to deviate from agreed-upon quotas or price levels.
 Market Distortions: ICAs can distort market signals and hinder efficient resource
allocation.
 Inefficiency: Price stabilization mechanisms may lead to overproduction or
underproduction, resulting in economic inefficiencies.
 Limited Success: The track record of ICAs has been mixed, with many
agreements failing to achieve their objectives.

Recent Trends and Future Outlook:

In recent years, there has been a decline in the use of ICAs due to the increasing
dominance of market-based solutions and the liberalization of global trade. However,
some ICAs continue to exist, particularly for commodities like coffee and cocoa.
The future of ICAs is uncertain. While they may still have a role to play in stabilizing
markets for certain commodities, their effectiveness will depend on careful design, strong
international cooperation, and a willingness to adapt to changing market conditions.
Conclusion
International Commodity Agreements are a complex tool with both potential benefits and
drawbacks. Their success depends on a careful balance of market intervention and market
forces. As the global economy continues to evolve, the role of ICAs will likely change,
requiring ongoing evaluation and adaptation to ensure their relevance and effectiveness.

European Union (EU)

1. Formation of the EU
 Origins:
o Post-World War II efforts to foster peace and economic cooperation in
Europe.
o 1951: Formation of the European Coal and Steel Community (ECSC) by
six founding members: Belgium, France, Germany, Italy, Luxembourg, and
the Netherlands.
o 1957: The Treaty of Rome established the European Economic Community
(EEC) and the European Atomic Energy Community (Euratom).
 Key Treaties:
o 1993: The Maastricht Treaty formally created the European Union,
introducing political union alongside economic integration.
o 2007: The Treaty of Lisbon streamlined governance and expanded areas of
cooperation.
 Growth:
o Expansion from 6 founding nations to 27 member states (as of 2024).
o Accession criteria are based on the Copenhagen Criteria, including
democracy, rule of law, and a functioning market economy.

2. Objectives of the EU
 Promote peace, stability, and well-being among member states.
 Foster economic integration through a single market with free movement of goods,
services, capital, and labor.
 Enhance social cohesion and reduce disparities between regions.
 Champion environmental protection and sustainable development.
 Uphold human rights and strengthen the global rule of law.
 Serve as a global actor in foreign policy, security, and development assistance.

3. Role and Functions

 Economic Integration:
o Maintenance of the Eurozone, which includes 20 of the 27 EU nations
sharing the euro as a common currency.
o Regulation of trade policies and customs through a common external tariff.
 Legislation:
o Drafting and implementing laws applicable across member states in areas
like competition, consumer protection, and environmental standards.
  Foreign Policy:
o Joint action on security and international relations through the Common
Foreign and Security Policy (CFSP).
 Judicial and Human Rights:
o Adjudication of EU law and member compliance via the European Court of
Justice (ECJ).
o Promotion of fundamental rights through the Charter of Fundamental
Rights.
 Social Policies:
o Labor market coordination, health standards, and education collaboration
via programs like Erasmus+.
 Climate Action:
o Leadership in global climate agreements, such as the European Green
Deal, aiming for net-zero emissions by 2050.

4. Main Reasons for Brexit

 Sovereignty Concerns:
o Many in the UK felt EU membership limited national decision-making in
areas like immigration, trade, and laws.
 Immigration Issues:
o The freedom of movement led to concerns about the perceived strain on
public services and local communities.
 Economic Costs:
o Debate over the UK’s financial contribution to the EU budget and
perceived unequal returns.
 Eurozone Divergence:
o The UK’s choice to remain outside the Eurozone created a sense of
detachment from the EU’s core projects.
 Cultural and Historical Factors:
o The UK's historical focus on its sovereignty and global outreach over
European integration contributed to ambivalence.
 Rise of Euroscepticism:
o Fueled by political movements and campaigns, notably by the UK
Independence Party (UKIP) and leaders like Nigel Farage.
 2016 Referendum:
o A 51.9% vote in favor of leaving the EU solidified the decision. The Leave
campaign highlighted control over borders, funds, and law-making.

5. Post-Brexit Developments
 The UK officially left the EU on January 31, 2020, entering a transition period.
 Trade and cooperation agreements define the new relationship, but tensions persist
over trade, Northern Ireland, and regulatory alignment.
This detailed outline captures the EU's evolution, its broad-ranging goals and functions,
and the pivotal factors leading to Brexit, reflecting the geopolitical complexities of the
region.

NAFTA
North American Free Trade Agreement (NAFTA), enacted in 1994, is an international
free trade agreement between 3 North American countries, Canada, the US and Mexico
and is the most important feature in the bilateral commercial relationship of the U.S.-
Mexico. The purpose of this agreement was to boost trade between these countries by
removing trading barriers and increasing investment opportunities. However, after
confronting certain disadvantages, the United States-Mexico-Canada Agreement
(USMCA) replaced NAFTA in 2020.

What is North American Free trade agreement (NAFTA)?

The North American Free Trade Agreement (NAFTA) is an international agreement
established on January 1, 1994. It is a free trade agreement signed by the governments of
Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
The goal of NAFTA is to eliminate all tariff and non-tariff barriers to trade and
investment between the United States, Canada, and Mexico.

Background of NAFTA
o During the 1980 Presidential campaign, President Ronald Reagan proposed the
idea of a unified market across North America, similar to the European Economic
Community established by the Treaty of Rome in 1957.
o Inspired by the success of the European Economic Community in eliminating
tariffs, the North American Free Trade Agreement (NAFTA) aimed to encourage
trade among its member countries.
o Advocates believed that establishing a free-trade area in North America would
lead to increased trade, production and the creation of millions of well-paying jobs
in the participating countries.
o In 1984, the Trade and Tariff Act was passed, granting increased "fast-track"
authority to negotiate bilateral free trade agreements, building on the earlier Trade
Act of 1974.
o Negotiations for the Canada-U.S. Free Trade Agreement began in 1985 when
Canadian Prime Minister Brian Mulroney consented to the talks.
o George H. W. Bush's Enterprise for the Americas Initiative led to the development
of NAFTA law.
o The Clinton administration, which signed NAFTA into law in 1993, anticipated
that it would generate 200,000 jobs in the U.S. within two years and 1 million
within five due to increased exports and lower tariffs.
o Negotiations for NAFTA started in 1986, and the agreement was signed in 1988.
 The Canada-U.S. Free Trade Agreement took effect on January 1, 1989, and
continued until NAFTA replaced it on January 1, 1994. The NAFTA agreement
was signed by President George H.W. Bush, Mexican President Salinas, and
Canadian Prime Minister Brian Mulroney in 1992.

Objectives of NAFTA
The objectives of NAFTA are enlisted in Chapter 1 of Article 102.
o To eliminate barriers to trade and facilitate the cross-border movement of goods
and services between the territories of the Parties
o To promote conditions of fair competition in the free trade area
o To increase substantially investment opportunities in the territories of the Parties
o To provide adequate and effective protection and enforcement of intellectual
property rights in each Party’s territory
o To create effective procedures for the implementation and application of this
Agreement, for its joint administration and the resolution of disputes
o To establish a framework for further trilateral, regional and multilateral
cooperation to expand and enhance the benefits of this Agreement.

Provisions of NAFTA
The full text of the trade agreement included extra annexes and appendices, as well as 22
chapters split into eight divisions. The key provisions of the NAFTA agreement are listed
below.

1. Elimination of Trade Barriers

The elimination of the majority of tariffs and other trade barriers was one of the key
objectives of NAFTA. High import taxes deterred cross-border trade in some
manufactured items prior to the advent of the North American Free Trade Agreement.
The pact also aimed to remove non-tariff trade restrictions such as border procedures and
licence requirements.

2. Intellectual Property Protections

NAFTA strengthened protections for intellectual property, including software and trade
secrets. Due to the decreased risk of corporate secrets being disclosed to a foreign rival,
these protections increased the incentives for cross-border trade.

3. Environmental and Labor Protections

o The Clinton administration negotiated a number of side agreements to assure
protections for the environment and labour rights in response to critics who
claimed that NAFTA’s common market would result in a decrease in
environmental and labour standards.
o The North American Agreement on Labor Cooperation, the first of these,
contained safeguards to stop child labour and other violations but did not fully
protect the freedom to organise.
 o The North American Agreement on Environmental Cooperation, the second,
established a commission to evaluate the effects of regulatory liberalisation on the
environment.
4. Dispute Resolution
The agreement contained a dispute resolution procedure for problems between investors,
corporations, and state governments in order to encourage cross-border trade even more.
In all three nations, this procedure received harsh criticism since it was perceived as a
tool for international firms to preempt local laws.

Advantages of NAFTA
The advantages of NAFTA are listed below.
o NAFTA lowered the price of many goods: Lower tariffs also reduced import
prices. As a result, the Federal Reserve maintained low interest rates and reduced
the risk of inflation.

o NAFTA was good for Gross Domestic Product: The North American Free Trade
Agreement boosted trade by eliminating all tariffs among the three countries (the
US, Canada, and Mexico). It also produced accords on global commercial investor
rights. As a result, trade was cheaper. It encourages growth and investment,
particularly for small enterprises.

o Improved diplomatic relations: NAFTA improved bilateral relations among its

member nations, i.e. Canada, Mexico, and the US.

o Increase exports and formation of regional industry blocs: Up to 0.5% per year
was added to U.S. economic growth thanks to NAFTA. 17 Agriculture, autos, and
services were the industries that profited the most.

o Creation of Jobs: NAFTA also helped in creating jobs through imports. There was
an increase in manufacturing exporters and revenue from factory workers.

o Increased Foreign Direct Investment: The North American Free Trade Agreement
also safeguarded intellectual properties. The pirating business was discouraged,
which helped innovative businesses. It boosted FDI because companies know that
international law will safeguard their rights. By ensuring that they will have the
same legal rights as local investors, NAFTA minimizes the risk for investors.

ASEAN
ASEAN stands for the Association of Southeast Asian Nations. It is a regional
intergovernmental organization comprising ten member countries in Southeast Asia. It
was set up on August 8, 1967, with the signing of the ASEAN Declaration, also known as
the Bangkok Declaration. The founding members of ASEAN were Indonesia, Malaysia,
Philippines, Singapore, and Thailand. The primary aim of ASEAN's establishment was to
promote regional peace, stability, and cooperation amidst the Cold War era tensions.

The Association of Southeast Asian Nations (ASEAN) is a regional association that was
founded to maintain social stability and political equilibrium among Asia’s post-colonial
states amid escalating conflicts. “One Vision, One Identity, One Community” is its
motto. The 8th of August is celebrated as the ASEAN Day. The ASEAN Secretariat is
based in Jakarta, Indonesia.

Origin of ASEAN
The ASEAN Declaration (Bangkok Declaration) was signed by the original members of
the organization in 1967. Indonesia, Malaysia, the Philippines, Singapore, and Thailand
are the originating members of ASEAN.

Members of the ASEAN

ASEAN consists of ten member countries. The ASEAN countries list include the
following:
o Thailand
o Singapore
o Vietnam
o Laos
o Indonesia
o Myanmar
o Philippines
o Brunei
o Malaysia
o Cambodia

ASEAN Objectives
The major objectives of the ASEAN include the following:
o To encourage proactive engagement and reciprocal support in the social, cultural,
economic, scientific, administrative and technological spheres on subjects of
shared relevance.
o Maintaining strong and mutually advantageous relationships with current global
and territorial organizations.
o To work together more efficiently to maximize the use of agriculture and industry,
expand commerce, enhance infrastructure and transportation, and raise citizens’
quality of life.
o To encourage the study of Southeast Asian regions.
o To work for a successful and harmonious Southeast Asian neighborhood, to
promote economic progress, social improvement, and cultural growth.
o To foster regional harmony and security via an adherence to fairness and by
maintaining a system of law, as well as conformity to the United Nations Charter’s
ideals.
Institutional Mechanism of ASEAN
The following structure of ASEAN allows it to carry out its work effectively:
o ASEAN Summit: The ASEAN Summit is the highest decision-making body of
ASEAN. It is attended by the heads of state or government of member countries.
The summit provides a platform for leaders to discuss and make decisions on
regional and international issues.
o ASEAN Ministerial Meetings: These are regular meetings of foreign ministers
from ASEAN member countries. The meetings serve as a forum for dialogue and
coordination on various political, economic, and social issues.
o ASEAN Secretariat: The ASEAN Secretariat is based in Jakarta, Indonesia. It
serves as the central administrative body of ASEAN. It supports the
implementation of ASEAN decisions, facilitates communication among member
countries, and coordinates activities related to ASEAN's work.
o ASEAN Coordinating Council: The ASEAN Coordinating Council comprises
foreign ministers from member countries.
o ASEAN Community Councils: ASEAN has three community councils that cover
different dimensions of cooperation:
o ASEAN Political-Security Community Council
o ASEAN Economic Community Council
o ASEAN Socio-Cultural Community Council
o ASEAN Sectoral Ministerial Bodies: These bodies cover various sectors and
facilitate cooperation in specific areas.

Fundamental Principles of ASEAN

The fundamental principles of ASEAN are:
o Mutual respect for each nation’s national identity, independence, and sovereignty
rights as well as its territorial integrity.
o Each independent state has to control its own internal affairs without outside
interference, pressure, or influence.
o Keeping distance from one another’s personal concerns.
o Amicably resolving issues or disagreements.
o Renunciating the use of force or the threat of it.
o Effective communication amongst themselves.

Forums led by ASEAN

Some of the major forums led by ASEAN have been discussed below:

1. ASEAN Regional Forum (ARF)

The ARF is the primary security dialogue forum in the Asia-Pacific region. It consists of
27 participants. This includes ASEAN member countries, major powers, and other
regional countries. The ARF aims to promote dialogue and cooperation on political and
security issues, confidence-building measures, and preventive diplomacy.
2. East Asia Summit (EAS)
The EAS is a forum for leaders from ASEAN member countries and its eight dialogue
partners, namely Australia, China, India, Japan, New Zealand, South Korea, Russia, and
the United States. The EAS focuses on strategic and economic issues and aims to
promote peace, stability, and economic integration in the region.

3. ASEAN Plus Three (APT)

APT includes ASEAN member countries, China, Japan, and South Korea. It aims to
enhance regional economic cooperation, financial stability, and people-to-people
exchanges. APT has resulted in various initiatives. This includes the Chiang Mai
Initiative for financial cooperation and the ASEAN Plus Three Emergency Rice Reserve.

Major Strengths of ASEAN

The major strengths of ASEAN are:
o ASEAN has successfully fostered economic integration through initiatives like the
ASEAN Economic Community (AEC).
o ASEAN has played a crucial role in maintaining peace and stability in the
Southeast Asian region. ASEAN promotes dialogue, confidence-building, and
conflict resolution among member countries. This is done through mechanisms
like the Treaty of Amity and Cooperation (TAC) and the ASEAN Regional Forum
(ARF).
o ASEAN provides a platform for dialogue and engagement among member
countries and external powers.
o ASEAN's principle of non-interference and consensus decision-making has
contributed to political cohesion and cooperation among member countries.
o ASEAN's diverse cultural heritage fosters people-to-people exchanges, cultural
cooperation, and mutual understanding among member nations.

SAARC

South Asian Association for Regional Cooperation, or SAARC, is an intergovernmental

body that promotes the growth of regional and economic cooperation. It can be called one
of the worst examples of regional integration. It is sometimes called like a jammed
vehicle. It is in a deadlock since 2016 after the Pathankot attack.

South Asia is the least integrated of all the nations except the Middle East. However,
regional integration is extremely urgent in SAARC as it is a means to transform the
conflict-prone nature of relations by creating interdependence in economic
and security issues.

The SAARC Charter was ratified in Dhaka on December 8, 1985, establishing the South
Asian Association for Regional Cooperation (SAARC). In November 1980, the concept
of regional cooperation in South Asia was initially proposed.

Who are the SAARC’s Members?

Eight countries comprise South Asian Association for Regional Cooperation:
1. Afghanistan
2. Bangladesh
3. Bhutan
4. India
5. the Maldives
6. Nepal
7. Pakistan

Currently, SAARC has nine observers:

1. Australia
2. China
3. The European Union
4. Iran
5. Japan
6. The Republic of Korea
7. Mauritius
8. Myanmar
9. The United States of America.

South Asian Association for Regional Cooperation, or SAARC, is an intergovernmental

body that promotes the growth of regional and economic cooperation. It can be called one
of the worst examples of regional integration. It is sometimes called like a jammed
vehicle. It is in a deadlock since 2016 after the Pathankot attack.

South Asia is the least integrated of all the nations except the Middle East. However,
regional integration is extremely urgent in SAARC as it is a means to transform the
conflict-prone nature of relations by creating interdependence in economic
and security issues.

The SAARC Charter was ratified in Dhaka on December 8, 1985, establishing the South
Asian Association for Regional Cooperation (SAARC). In November 1980, the concept
of regional cooperation in South Asia was initially proposed.
Need for SAARC
It has the largest poor population in the world and is most vulnerable to natural disasters.
It is extremely vulnerable to nuclear war and conventional and non-conventional security
threats like human trafficking, organized crime, and religious extremism.

It has been extremely vulnerable to great power politics due to its strategic location for it
is the conflict in the region in the hour of instability. There is an urgent need for regional
integration.

The 21st century has changed the idea of security, create complex interdependence, and
compelled neighbors to change their approach. The old Kautilyan approach where the
neighbor is a natural enemy is hardly sustainable.

History: It is the brainchild of Zia-ur-Rehman the Bangladesh President and came into
existence in 1985.

Structure of SAARC
Council: It is the highest policy-making body. Government leaders from the individual
member nations serve as the council’s representatives.
Council of Ministers: The Council of Ministers is made up of foreign ministers, and it
usually meets twice a year.

Areas for SAARC Nations’ Cooperation

 Agricultural development
 Tourism and Human Resource Development
 Economic, Trade, and Finance
 Social Services
 Natural disasters, the environment, and biotechnology
 Education, health, culture, and other factors
 Raising awareness and reducing poverty
 Transportation, Science, Energy, and Technology

1. Promoting the Welfare of South Asian People

One of the primary objectives of SAARC is to improve the quality of life for the people
of South Asia. This broad goal encompasses various aspects, including:
 Poverty alleviation,
 Health and nutrition,
 Education and literacy,
 Social welfare.

SAARC aims to create programs and initiatives that directly benefit the citizens of its
member countries, addressing their basic needs and enhancing their overall well-being.
2. Accelerating Economic Growth and Social Progress
Economic development is a crucial objective of SAARC. The organization works
towards:
 Promoting trade and economic cooperation among member states,
 Encouraging investment in the region,
 Facilitating technology transfer,
 Supporting sustainable development initiatives.

By focusing on these areas, SAARC aims to boost the economies of its member countries
and improve the standard of living for their citizens.

3. Promoting Active Collaboration in Various Fields

SAARC recognizes the importance of cooperation across multiple sectors. The objectives
of SAARC include fostering collaboration in:
 Agriculture and rural development,
 Science and technology,
 Culture and arts,
 Sports and youth activities.

This multifaceted approach ensures that the benefits of regional cooperation extend to
various aspects of society and governance.

4. Strengthening Cooperation Among Member States

Building strong relationships between member countries is another key objective of
SAARC. This involves:
 Promoting understanding and trust,
 Encouraging people-to-people contact,
 Facilitating cultural exchanges,
 Supporting regional tourism.

By strengthening these ties, SAARC aims to create a more cohesive and harmonious
South Asian community.

5. Enhancing Self-Reliance Among Member Countries

SAARC strives to reduce the dependence of its member states on external assistance. The
objectives of SAARC in this regard include:
 Promoting the sharing of resources and expertise within the region.
 Encouraging joint ventures and collaborative projects.
 Supporting the development of local industries and technologies.

This focus on self-reliance helps to build a more resilient and independent South Asian
region.
6. Contributing to Mutual Trust and Understanding
Fostering peace and stability in the region is a crucial objective of SAARC. This
involves:
 Promoting dialogue and cooperation on security issues.
 Addressing common challenges such as terrorism and drug trafficking.
 Encouraging peaceful resolution of conflicts.

By working together on these issues, SAARC aims to create a more secure and
harmonious South Asia.

7. Promoting Collaboration with International and Regional Organizations

SAARC recognizes the importance of engaging with the global community. Its objectives
include:
 Establishing partnerships with other international organizations.
 Participating in global initiatives and forums.
 Representing South Asian interests on the world stage.

This outward-looking approach helps to integrate South Asia into the global community
and amplify its voice in international affairs.

Issues
The reason for the failure of the organization is India-Pakistan relations. The two largest
SAARC countries are responsible for the failure to a great extent yet there are some
structural and fundamental problems in SAARC. One of the reasons for the failure is that
SAARC is a platform with a negative mindset.

SAARC would be an India-dominated platform was the reason Pakistan opposed it. Later
Pakistan thought not to leave India and joined to oppose India’s proposal. In other
regional organizations, there has been an external factor but there was no push factor here
rather South Asia became praise to superpower rivalry

Pakistan is still suffering from an Identity crisis hence it wants to strengthen its separate
identity rather than strengthening the South Asian identity. Pakistan has been trying to be
recognized as a part of West Asia. In 2016, Pakistan objected to India’s proposed
SAARC satellite project, which was subsequently abandoned. Even Sri Lanka tries to be
a part of southeast Asia.

It is said that South Asia is a name looking for a place on the map. It is a new name for
the Indian subcontinent which ensures the centrality of India. India has been seen as a
Bully Big Brother since the integration of Sikkim, and the formation of Bangladesh. The
Indian neighbors look at India as an imperialist power. They tend to look toward China as
the counterweight.
India lacks soft power in the region. India doesn’t differ from other neighbors in terms of
governance and Human Development. In some contexts, India’s performance is even
worse than others. Under SAARC, numerous agreements have been negotiated and
institutional frameworks created, but they have not been properly put into practice.

SAARC was advised to work on transforming South Asia into a Free Trade Area by
2010, a Customs Union by 2015, and an Economic Union similar to the EU by 2020. It is
still just a dream. Little has been done by SAARC to combat the coronavirus outbreak.
When the nations most needed each other, they did nothing.

Levels of Integration between countries

 Free trade. Tariffs (a tax imposed on imported goods) between member countries
are significantly reduced, and some are abolished altogether. Each member
country keeps its tariffs regarding third countries, including its economic policy.
The general goal of free trade agreements is to develop economies of scale and
comparative advantages, promoting economic efficiency. A challenge concerns
resolving disputes as free trade agreements tend to offer limited arrangements and
dispute resolution mechanisms. Therefore, they are prone to the respective
influence and leverage of the involved nations, which can lead to different
outcomes depending on their economic size. A large and complex economy
having a free trade agreement with smaller economies is better positioned to
 negotiate advantageous clauses and dispute resolution.

 Custom union. Sets common external tariffs among member countries, implying
that the same tariffs are applied to third countries; a common trade regime is
achieved. Custom unions are particularly useful to level the competitive playing
field and address the problem of re-exports where importers can be using
preferential tariffs in one country to enter (re-export) another country with which it
has preferential tariffs. Movements of capital and labor remain restricted.

 Common market. Services and capital are free to move within member countries,
expanding scale economies and comparative advantages. However, each national
market has its own regulations, such as product standards, wages, and benefits.

 Economic union (single market). All tariffs are removed for trade between
member countries, creating a uniform market. There are also free movements of
labor, enabling workers in a member country to move and work in another
member country. Monetary and fiscal policies between member countries are
harmonized, which implies a level of political integration. A further step concerns
a monetary union where a common currency is used, such as the European Union
(Euro).

 Political union. Represents the potentially most advanced form of integration with
a common government and where the sovereignty of a member country is
significantly reduced. Only found within nation-states, such as federations where a
central government and regions (provinces, states, etc.) have a level of autonomy
over well-defined matters such as education.

As the level of economic integration increases, so does the complexity of its regulations.
This involves a set of numerous regulations, enforcement, and arbitration mechanisms to
ensure that importers and exporters comply. The complexity comes at a cost that may
undermine the competitiveness of the areas under economic integration since it allows for
less flexibility for national policies and a loss of autonomy. The devolution of economic
integration could occur if the complexity and restrictions it creates, including the loss of
sovereignty, are no longer judged to be acceptable by its members.
European Free Trade Association (EFTA)

 EFTA is an intergovernmental organisation established in 1960 by the EFTA

Convention, that promotes free trade and economic integration between its
members, within Europe and globally .

 There were 7 founding countries: Austria, Denmark, Norway, Portugal, Sweden,

Switzerland and the United Kingdom (UK). They were joined in 1970 by Iceland,
in 1986 by Finland and in 1991 by Liechtenstein. Meanwhile, in 1973, Denmark
and the UK joined the EU; in 1986, Portugal joined the EU, and, in 1995, Austria,
Finland and Sweden joined the EU, consequently leaving EFTA.

 EFTA currently has 4 member countries: Iceland, Liechtenstein, Norway and

Switzerland.

 The EFTA countries have developed one of the largest networks of Free Trade
Agreements (FTAs). These FTAs span over 60 countries and territories, including
the EU.

 EFTA’s highest governing body is the EFTA Council. It generally meets 8 times
a year at ambassadorial level and twice a year at ministerial level.

 Although EFTA states are small, their economies are significant, with goods and
services exports and imports worth almost $1.3 trillion (in 2021).

 These countries have a highly skilled workforce and are leading the world in
industries such as pharmaceuticals, biotechnology, and machinery manufacturing.

 EFTA has a history of negotiating trade agreements that benefit both sides, having
established 29 free trade agreements (FTAs) with 40 countries so far.

 These FTAs contribute to almost 22% of the total imports of EFTA states.

 The headquarters of the EFTA Secretariat are located in Geneva, with offices in
Brussels and Luxembourg. The Secretariat in Geneva assists the EFTA Council in
the management of relations between the 4 EFTA States, and deals with the
negotiation and operation of EFTA’s FTAs and Joint Declarations on Cooperation
with non-EU countries. The Secretariat in Brussels provides support for the
management of the EEA Agreement, including the preparation of new legislation
and assistance in providing input into EU decision making. The EFTA Statistical
Office in Luxembourg contributes to the development of a broad and integrated
European statistical system.

 The EFTA Surveillance Authority (ESA) monitors compliance with European

Economic Area (EEA) rules in Iceland, Liechtenstein and Norway. It has powers
 that are similar to those of the European Commission regarding the surveillance
and application of EEA law.

 The EFTA Court, based in Luxembourg, has the competence and authority to
settle internal and external disputes regarding the implementation, application or
interpretation of the EEA agreement. Its jurisdiction corresponds to that of the
Court of Justice of the European Union in matters relating to the EEA EFTA
countries.

EFTA and India

 If Norway, Iceland, Switzerland, Liechtenstein, and India agree to a TEPA, it will
benefit everyone involved.
 EFTA countries are experts in pharmaceuticals, biotechnology, and machinery
manufacturing, while India is known for its economic growth and green
technologies.
 Together, they could enhance trade, research and development, and innovation,
and encourage business collaboration.
 The agreement would also help boost India’s export potential to EFTA markets by
improving market access for goods.

1. EFTA States are Partners in India’s Growth Story:

 The countries in EFTA have large investments in different areas such as
machinery, banking, pharmaceuticals, electrical engineering and metals.
 If they sign a trade agreement, it is expected that they will increase their
investments in India.

2. Mutually Beneficial Relationship for Skilled Labour:

 The skilled labour market is mutually beneficial for EFTA states and India.
Around 20,000 Indian professionals contribute to Norway’s high-tech industry,
and India is the top non-EU country for work permits issued in Switzerland.
 With a trade agreement between EFTA and India, more opportunities for Indian
service providers will arise.

3. Collaboration on Green Growth:

 Collaboration between EFTA states and India on green growth is possible.
 India has set a target of meeting 50% of its energy needs with renewable sources
by 2030, and EFTA states can provide expertise in cutting-edge technologies such
as wind, solar, geothermal power, and hydro to help achieve this goal.
Andean Community
Establishment:
o Created by the Cartagena Agreement signed on May 26, 1969, in
Cartagena, Colombia.
o Originally called the Andean Pact, it was renamed the Andean
Community in 1996.
Member States:
o Current Members: Bolivia, Colombia, Ecuador, and Peru.
o Associate Members: Argentina, Brazil, Chile, Paraguay, and Uruguay
(countries part of MERCOSUR).
o Observer Countries: Mexico and Panama.
o Venezuela was a founding member but withdrew in 2006.
Objective: To promote regional integration and cooperation through:
o Trade liberalization.
o Economic policy coordination.
o Shared development projects.
Institutional Structure:
o Andean Presidential Council: Comprising heads of state, it defines
political priorities and strategic goals.
o Council of Foreign Ministers: Oversees foreign policy and international
relations of the bloc.
o General Secretariat: The executive body based in Lima, Peru, responsible
for daily administration.
o Andean Parliament: Consultative body promoting citizen participation.
o Andean Court of Justice: Ensures uniform interpretation of Andean law.
o Business Advisory Council and Labor Advisory Council: Forums for
private sector and labor union participation.

Key Functions and Features of the Andean Community

Trade and Economic Integration:
o Free Trade Area: Elimination of tariffs on most goods traded within the
bloc.
o Customs Union: Adoption of a Common External Tariff (CET) on imports
from outside the region.
o Harmonized Trade Policies: Common policies for agriculture, industry,
and competition.
Common Market Goals:
o Facilitation of the free movement of goods, services, capital, and labor.
o Ongoing efforts to establish deeper integration akin to the European Union.
Economic Policy Coordination:
o Members coordinate fiscal, monetary, and exchange rate policies to ensure
macroeconomic stability.
o Promote joint development projects in sectors such as energy, transport,
 and telecommunications.
Social and Environmental Cooperation:
o Programs addressing poverty reduction, education, and public health.
o Environmental initiatives, particularly focused on preserving the Andean
ecosystem.
Andean Identity:
o Promotion of cultural integration and indigenous heritage.
o Strengthening cooperation in science, technology, and innovation.

Achievements of the Andean Community

1. Trade Growth:
o Significant increase in intra-regional trade among member states.
o Enhanced competitiveness of member countries in global markets.
2. Institutional Development:
o Establishment of legal and institutional frameworks to support integration.
o Formation of a robust dispute resolution mechanism via the Andean Court
of Justice.
3. Social Integration:
o Introduction of the Andean Passport, facilitating free movement of people
within the bloc.
o Cooperation on education and cultural exchange programs.
4. Environmental Policies:
o Implementation of the Andean Environmental Agenda to address climate
change, deforestation, and biodiversity loss.

Challenges Faced by the Andean Community

1. Political and Economic Disparities:
o Member states exhibit significant differences in economic size, policies,
and levels of development.
o Divergent political ideologies have occasionally slowed integration efforts.
2. Limited Financial Resources:
o Lack of adequate funding for large-scale regional projects.
o Dependence on external financing for development initiatives.
3. Overlap with Other Regional Blocs:
o Competing interests with organizations like MERCOSUR have diluted the
focus on CAN.
o Members often prioritize bilateral agreements over regional commitments.
4. Withdrawal of Venezuela:
o Venezuela’s departure in 2006 weakened the bloc’s economic and
geopolitical influence.
Introduction to MERCOSUR
 MERCOSUR (Southern Common Market) is a regional trade bloc established to
promote economic integration among its member states in South America.
 It was founded by the Treaty of Asunción in 1991 and further institutionalized by
the Protocol of Ouro Preto in 1994.
 The organization’s primary goal is to create a common market, facilitate trade, and
foster economic cooperation among member states.

Key Member States

1. Full Members:
o Argentina
o Brazil
o Paraguay
o Uruguay
Suspended Member:
o Venezuela (suspended since 2016 due to political and economic issues).

2. Associate Members: Countries like Chile, Bolivia, Peru, Colombia, Ecuador,

and Guyana participate as associate members, having trade agreements with
MERCOSUR without full membership.

3. Observer States:
o Mexico and New Zealand have observer status, participating in discussions
but not bound by MERCOSUR’s agreements.

4. Bolivia’s Accession:
o Bolivia is in the process of becoming a full member, with formalization
pending ratifications.

Structure of MERCOSUR
1. Decision-Making Bodies:
o Council of the Common Market (CMC): The highest decision-making
body, comprising foreign ministers and economic ministers of member
states.
o Common Market Group (CMG): Executive body responsible for
implementing decisions and coordinating policies.
o MERCOSUR Trade Commission (MTC): Manages trade policies, tariff
adjustments, and dispute resolution.
2. Supporting Institutions:
o Parlasur: MERCOSUR Parliament, a consultative body that promotes
democratic participation.
o Administrative Secretariat: Manages day-to-day activities and logistical
coordination.
Objectives of MERCOSUR
1. Economic Integration:
o Establish a common market by eliminating trade barriers, harmonizing
external tariffs, and encouraging the free movement of goods, services,
capital, and labor.
2. Trade Liberalization:
o Gradually remove tariffs among member states and adopt a Common
External Tariff (CET) for non-member countries.
3. Social and Political Cooperation:
o Promote democracy, human rights, and sustainable development among
member states.
o Enhance cooperation in areas like education, science, technology, and
culture.
4. Dispute Resolution:
o Provide mechanisms for resolving trade disputes and maintaining a fair
trading environment.

Achievements of MERCOSUR
1. Increased Intra-Regional Trade:
o Trade among member states has significantly increased since the bloc’s
inception, reducing dependence on external markets.
2. Political Cooperation:
o MERCOSUR has become a platform for dialogue on regional issues,
fostering unity in addressing global challenges.
3. Global Influence:
o MERCOSUR negotiates trade agreements with other regional blocs and
countries, enhancing South America’s presence on the global stage.
4. Cultural and Social Integration:
o Various programs, such as education exchange and cultural cooperation,
have strengthened regional identity.

Challenges Facing MERCOSUR

1. Asymmetry Among Members:
o Economic disparities between members (e.g., Brazil vs. Paraguay) have led
to uneven benefits from integration.
2. Political Instability:
o Changes in political regimes and priorities within member states often
disrupt continuity in policies and agreements.
3. Protectionism:
o MERCOSUR has faced criticism for maintaining high tariffs and being
slow in liberalizing trade with external partners.
4. Limited Supranational Authority:
o The organization relies heavily on consensus, which can delay decision-
making and implementation.
5. Global Trade Dynamics:
o Competition with other trade blocs like the European Union (EU) and the
Comprehensive and Progressive Agreement for Trans-Pacific Partnership
(CPTPP) limits MERCOSUR’s influence.