United N and its specialised agencies

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UN AND ITS SPECIALISED AGENCIES











Prepared by


DR. AFROZ ALAM
ASSISTANT PROFESSOR OF POLITICS
NATIONAL LAW UNIVERSITY, ORISSA
E-MAIL: [email protected]
[email protected]

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UN AND ITS SPECIALISED AGENCIES
Structure:
10.0 Objectives
10.1 Introduction
10.2 The UN and Its Specialised Agencies
10.3 United Nations Educational, Scientific and Cultural Organisation (UNESCO)
10.4 United Nations Children’s Fund (UNICEF)
10.5 International Labour Organisation (ILO)
10.6 International Monetary Fund (IMF)
10.7 World Bank Group
10.8 World Trade Organisation (WTO)
10.9 Let Us Sum Up
10.10 Some Useful Books

10.0 Objectives:
It is beyond the purview of this chapter to discuss all the specialised agencies of the United Nations. We dealt
with only five important agencies and one allied organisation (WTO) in order to offer some appreciation for the
enormous scale of their activities. After going through this chapter you will be able to:
· expand your knowledge base about the UN’s specialised agencies
· develop a critical ability to analyse the functioning of these specialised agencies

10.1 Introduction:
The maintenance of peace and security is the final purpose assigned to the United Nations. However, for the last
three decades the UN has expanded by leaps and bounds in an uncoordinated process of growth, spawning a
large network of agencies and programmes concerned with humanitarian, economic, and social development
questions. The creation of the specialised agencies, under the coordinating and directing machinery of the
Economic and Social Council (ECOSOC), prove themselves as the milestone of this pattern of institutional
growth.

10.2 The UN and Its Specialised Agencies:
There are a myriad of organisations within the UN system that focus on specific issues. The most important are
the specialised agencies working through the coordinating machinery of the UN Economic and Social Council

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(ECOSOC). In fact, the specialised agencies are so highly independent of any effective control by United
Nations organs that they are generally described as autonomous organisations. Each has its own headquarters,
staff, and budget. Each was created in the same manner as the United Nations, by an international conference
that produced a constitution or charter for the proposed organisation in the form of a multilateral treaty.
Membership is independent of the UN membership but is predominantly identical since all agencies aim at near
universality, and most agencies have substantially more than 190 members.
After each intergovernmental agency is established by international treaty independently of the United Nations,
it becomes as specialised agency of the UN by an agreement between the agency and the United Nations. This
agreement is negotiated between the agency and the Economic and Social Council subject to approval by the
General Assembly. The purpose of the agreement is to spell out the relationship and avenues of coordination
between the agency and the United Nations. The agreements normally include provisions for: 1) reciprocal
representation at meetings, 2) reciprocal proposal of agenda items, 3) exchange of documents and information,
4) submission of reports by the specialised agencies to the UN, 5) prompt consideration by the agencies of
recommendations by appropriate UN organs, 6) consultation to achieve uniform personal standards and
practices, and 7) submission of agency budgets to the UN for review and recommendation.
At present, sixteen specialised agencies operate today in affiliation with the United Nations. One temporary
agency, the International Refugee Organisation (IRO), existed from 1948 to 1952 and was dissolved. The
present agencies follow:
1. ILO - International Labour Organization
2. FAO - Food and Agriculture Organization
3. UNESCO - United Nations Educational, Scientific and Cultural Organization
4. WHO - World Health Organization
5. World Bank Group
IBRD - International Bank for Reconstruction and Development
IDA - International Development Association
IFC - International Finance Corporation
MIGA - Multilateral Investment Guarantee Agency
ICSID - International Centre for Settlement of Investment Disputes
6. IMF - International Monetary Fund
7. ICAO - International Civil Aviation Organization
8. IMO - International Maritime Organization
9. ITU - International Telecommunication Union
10. UPU - Universal Postal Union

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11. WMO - World Meteorological Organization
12. WIPO - World Intellectual Property Organization
13. IFAD - International Fund for Agricultural Development
14. UNICEF - United Nations Children Fund
15. UNIDO - United Nations Industrial Development Organization
16. IRO - International Refugee Organization (ceased to exist in 1952)
17. INCB - International Narcotics Control Board
We need not to discuss all the specialised agencies. We will undertake only five specialised agencies for our
discussion such as UNESCO, UNICEF, World Bank, IMF, and ILO. We will also focus on one agency that
resembles specialised agencies in some, but not all, characteristics that is World Trade Organisation (WTO).
Check Your Progress 1
Note: Use the space given below for your answer. Also check your answer with the model answer given at the
end of the Unit.

Q. 1 What is the relationship between the UN and its specialised agencies?
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10.3 United Nations Educational, Scientific and Cultural Organisation (UNESCO):
UNESCO (United Nations Educational, Scientific and Cultural Organization) is a specialized agency of the
United Nations established in 1945. Its stated purpose is to contribute to peace and security by promoting
international collaboration through education, science, and culture in order to further universal respect for
justice, the rule of law, and the human rights and fundamental freedoms proclaimed in the UN Charter.
In total, 191 nations belong to UNESCO. The organization is based in Paris, with over 50 field offices and
several institutes and offices throughout the world. Most of the field offices are "cluster" offices covering three
or more countries; there are also national and regional offices. UNESCO pursues its action through five major
programmes: education, natural sciences, social and human sciences, culture, and communication and
information. Projects sponsored by UNESCO include literacy, technical, and teacher-training programmes;

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international science programmes; the promotion of independent media and freedom of the press; regional and
cultural history projects, the promotion of cultural diversity; international cooperation agreements to secure the
world cultural and natural heritage and to preserve human rights; and attempts to bridge the world-wide digital
divide
UNESCO is working to create the conditions for genuine dialogue based upon respect for shared values and the
dignity of each civilization and culture.
This role is critical, particularly in the face of terrorism, which constitutes an attack against humanity. The
world urgently requires global visions of sustainable development based upon observance of human rights,
mutual respect and the alleviation of poverty, all of which lie at the heart of UNESCO’s mission and activities.
Through its strategies and activities, UNESCO is actively pursuing the Millennium Development Goals,
especially those aiming to:
1. halve the proportion of people living in extreme poverty in developing countries by 2015
2. achieve universal primary education in all countries by 2015
3. eliminate gender disparity in primary and secondary education by 2005
4. help countries implement a national strategy for sustainable development by 2005
5. to reverse current trends in the loss of environmental resources by 2015.

Structure of the UNESCO:
Three bodies are responsible for policy-making, governance, and day-to-day administration at UNESCO:
· The General Conference
· The Executive Board
· The Secretariat
The General Conference is a gathering of the organization's member states and associate members, at which
each state has one vote. Meeting every two years, it sets general policies and defines programme lines for the
organization.
The Executive Board's 58 members are elected by the General Conference for staggered four-year terms. The
Executive Board prepares the sessions of the General Conference and ensures that its instructions are carried
out. It also discharges other specific mandates assigned to it by the General Conference.
The Secretariat consists of the Director-General and his staff and is responsible for the day-to-day running of
the organization. The Director-General, who serves as the public face of UNESCO, is elected for a (renewable)
four-year term by the General Conference. The staff currently numbers some 2100, of whom some two-thirds
are based in Paris, with the remaining third spread around the world in UNESCO's 58 field offices. The

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Secretariat is divided into various administrative offices and five programme sectors that reflect the
organization's major areas of focus.
Controversy and Reform
UNESCO has been at the centre of controversy, particularly in the United States, the United Kingdom, and
Singapore. During the 1970s and 1980s, UNESCO's support for a "New World Information and
Communication Order" and its MacBride report calling for democratization of the media and a more egalitarian
access to information was condemned in these countries as attempts to destroy the freedom of the press.
UNESCO was perceived by some as a platform for communist and Third World countries to attack the West. In
1984, the United States withheld its contributions and withdrew from the organization in protest, followed by
the United Kingdom in 1985 and Singapore in 1986. Following the change in government in 1997, the UK
rejoined; the United States rejoined in 2003. (As of 2007, Singapore has still not rejoined.) During this period,
considerable reforms had been implemented in the organization.
These included the following measures: the number of divisions in UNESCO was cut in half, allowing a
corresponding halving of the number of Directors — from 200 to under 100, out of a total staff of
approximately 2,000 worldwide. At the same time, the number of field units was cut from a peak of 79 in 1999
to 52 today. Parallel management structures, including 35 Cabinet-level special advisor positions, were
abolished. Between 1999 and 2003, 209 negotiated staff departures and buy-outs took place, causing the
inherited $10 million staff cost deficit to disappear. The staff pyramid, which was the most top-heavy in the UN
system, was cut back as the number of high-level posts was halved and the “inflation” of posts was reversed
through the down-grading of many positions. Open competitive recruitment, results-based appraisal of staff,
training of all managers and field rotation were instituted, as well as SISTER and SAP systems for transparency
in results-based programming and budgeting. In addition, the Internal Oversight Service (IOS) was established
in 2001 to improve organizational performance by including the lessons learned from program evaluations into
the overall reform process. In reality though, IOS's main tasks involve auditing rather than programme
oversight; it regularly carries out audits of UNESCO offices that essentially look into administrative and
procedural compliance, but do not assess the relevance and usefulness of the activities and projects that are
carried out.
Programming coherence and relevance remains a challenge at UNESCO. One of the main reasons for this is that
activities and projects can be identified and supervised by various services within the organization (divisions
and sections based at UNESCO Headquarters in Paris, UNESCO regional and cluster field offices and
international institutes) with insufficient coordination between them.

10.4 United Nations Children’s Fund (UNICEF):

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United Nations Children’s Fund (UNICEF) organization founded by the United Nations on December 11, 1946
to provide food, clothing, and rehabilitative programs to European children brutalized by World War II (1939-
1945). In 1950 the United Nations made UNICEF responsible for improving the welfare of all children
worldwide. In 1953, its name was shortened from United Nations International Children's Emergency Fund, but
is still known by the popular acronym based on this old name. Its headquarters is located in New York.
In the United States, Canada and some other countries, UNICEF is known for its "Trick-Or-Treat for UNICEF"
program in which children collect money for UNICEF from the houses they trick-or-treat at, sometimes instead
of candy. Following the reaching of term limits by Executive Director of UNICEF Carol Bellamy, former
United States Secretary of Agriculture Ann Veneman took control of the organization in May 2005 with an
agenda to increase the organization's focus on the Millennium Development Goals.
The organization’s mission is threefold: (1) to ensure that basic nutrition, health, and education needs of
children are met, (2) to give children the opportunity to expand their potential, and (3) to create an international
ethical standard of behavior toward children.
Since 1950 UNICEF has focused primarily on promoting “sustainable development” in more than 140
developing nations. By providing community-based services to teach community leaders to build wells and
sewage disposal systems, UNICEF has helped provide millions of children with clean drinking water and
sanitary living conditions. By training educators to develop effective school programs, the agency has enabled
children around the world to benefit from a primary school education. In recognition of its efforts, UNICEF
received the 1965 Nobel Prize for International Peace and Prince of Asturias Award of Concord in 2006.
UNICEF also provides a relief network for children and their parents or other caregivers in the aftermath of
disasters, such as floods, earthquakes, and droughts. It has worked extensively with children from war-torn
countries to help alleviate their suffering. In the United States, UNICEF has focused its work on inner-city
children victimized by random violence and gang warfare.
In 1990 representatives from 158 countries, including 71 heads of state, attended UNICEF’s World Summit for
Children in New York City. The summit’s action plan established worldwide goals for the health and well-
being of children, to be achieved by the year 2000. These goals are: (1) to reduce by one-third the number of
deaths among children under the age of 5 (more than 14 million such deaths occurred in 1990), (2) to reduce
malnutrition in children under age 5 by one-half, (3) to create universal access to safe drinking water and
sanitary disposal of human waste, and (4) to provide universal access to basic education.
Since the 1990 summit UNICEF has immunized millions of children against potentially fatal diseases, such as
diphtheria, tetanus, whooping cough, measles, polio, and tuberculosis. In 1996 about 80 percent of the world’s
children received vaccinations, up from 20 percent in 1990. UNICEF’s promotion of basic health-care delivery

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systems and treatments, such as rehydration therapy for children suffering from diarrhea, has also contributed to
dramatic reductions in child mortality.
UNICEF receives financial support from more than 150 national governments. Like many international aid
organizations, however, UNICEF faces shrinking government subsidies for the work it performs. UNICEF’s
challenge in the years ahead is to attract a greater percentage of its funding from foundations, corporations, and
individuals to ensure its programs can continue.
Structure of the UNICEF
The heart of UNICEF's work is in the field, with staff in over 150 countries and territories. More than 120
country offices carry out UNICEF's mission through a unique program of cooperation developed with host
governments. Seven regional offices guide their work and provide technical assistance to country offices as
needed.
Overall management and administration of the organization takes place at its headquarters in New York.
UNICEF's Supply Division is based in Copenhagen and serves as the primary point of distribution for such
essential items as lifesaving vaccines, antiretroviral medicines for children and mothers with HIV, nutritional
supplements, emergency shelters, educational supplies, and more.
Many people in industrialized countries first hear about UNICEF’s work through the activities of 37 National
Committees for UNICEF. These non-governmental organizations are primarily responsible for fundraising,
selling UNICEF greeting cards and products, creating private and public partnerships, advocating for children’s
rights, and providing other invaluable support. The U.S. Fund for UNICEF is the oldest of the National
Committees, founded in 1947.
UNICEF is supported entirely by voluntary funds. Governments contribute two thirds of the organization's
resources; private groups and some 6 million individuals contribute the rest through the National Committees.
Guiding and monitoring all of UNICEF's work is a 36-member Executive Board which establishes policies,
approves programs and oversees administrative and financial plans. The Executive Board is made up of
government representatives who are elected by the United Nations Economic and Social Council, usually for
three-year terms.
Check Your Progress 2
Note: Use the space given below for your answer. Also check your answer with the model answer given at the
end of the Unit.

Q. 1 Write the main objectives of UNESCO and the UNICEF.
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10.5 International Labour Organisation (ILO):
International Labour Organization (ILO), a specialized agency associated with the United Nations (UN), whose
worldwide objectives are to improve labour conditions, promote productive employment and social progress,
and raise living standards. The ILO was established in 1919 as an autonomous part of the League of Nations
and brought into formal relationship with the UN in 1946. The organization was awarded the Nobel Peace Prize
in 1969.
The ILO is composed of 175 member nations and differs from other UN agencies because representatives of
employers and workers, as well as government officials, take part in its work. Each member nation sends four
delegates: two from the government, one employer, and one worker. The organization's principal organ, the
International Labour Conference, meets annually in Geneva, Switzerland, to define and ratify international
labour standards. The organization does this by means of conventions, which are subject to voluntary
ratification by member nations, and recommendations that provide nations with detailed guidelines for
legislation.
The ILO sets standards that cover child labour, disabled workers, discrimination, equality of treatment, freedom
of association, human rights, maternity protection, pensions, and the elimination of forced labour. The
organization supervises the application of ratified conventions in national law and practice. Employers' and
workers' organizations and member nations' governments have the right to lodge formal complaints with the
ILO.
The ILO also provides technical assistance to member nations in order to facilitate the adoption and
enforcement of ILO standards. Technical cooperation programs cover employment promotion, management,
and training; labour administration and industrial relations; social security; and working conditions,
occupational safety, and health.
The ILO's governing body has 56 members: 28 represent governments (10 of which hold permanent seats as
states of chief industrial importance), 14 represent employers, and 14 represent workers. Non-permanent
members are elected by the Conference every three years. The Governing Body appoints the director-general
and drafts the organization's budget that is funded by member states. ILO headquarters is in Geneva,

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Switzerland, and the organization maintains field offices in 40 countries. Its secretariat is known as the
International Labour Office and its current Director-General is Juan Somavia (since 1999).

10.6 International Monetary Fund (IMF):
The International Monetary Fund (IMF) is an international organization that oversees the global financial
system by observing exchange rates and balance of payments, as well as offering financial and technical
assistance when requested. Its headquarters are located in Washington, D.C. and offices around the world.
IMF describes itself as "an organization of 185 countries, Montenegro being the 185th as of January 18th, 2007,
working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote
high employment and sustainable economic growth, and reduce poverty". With the exception of North Korea,
Cuba, Andorra, Monaco, Liechtenstein, Tuvalu and Nauru, all UN member states participate directly in the
IMF. Some are represented by other member states. The Vatican City, the Republic of China (Taiwan), the
Palestinian Authority and the Sahrawi Arab Democratic Republic (Western Sahara) are the non-UN member
entities not participating in the IMF.
Historical Backdrop of the IMF:
In the Great Depression of the 1930s, as economic activity in the major industrial countries diminished,
countries began to adopt mercantilist practices, as an attempt to defend their economies by increasing
restrictions on imports. To conserve diminishing reserves of gold and foreign currency, some countries
restricted foreign imports, some devalued their currencies, and some began policies of complicated restrictions
on foreign exchange accounts held by their citizens. These measures were arguably detrimental to the countries
themselves as the theory of Ricardian comparative advantage states that all countries gain from trade without
restrictions. It is noteworthy to mention that, although the "size of the pie" is enhanced according to this theory
of free trade, improving all industries, when distributional concerns are taken into account, there are always
industries that lose out even as others benefit in any given country. World trade declined sharply, as did
employment and living standards in many countries.
As World War II came to a close, the leading allied countries considered various plans to restore order to
international monetary relations, and at the Bretton Woods conference the IMF emerged. The founding
members drafted a charter (or Articles of Agreement) of an international institution to oversee the international
monetary system and to promote both the elimination of exchange restrictions relating to trade in goods and
services, and the stability of exchange rates.
The IMF came into existence in December 1945, when the first 29 countries signed its Articles of Agreement.
The statutory purposes of the IMF today are the same as when they were formulated in 1944.
Activities of the IMF:

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

10.7 World Bank Group:
The World Bank Group is a group of five international organizations responsible for providing finance and
advice to countries for the purposes of economic development and eliminating poverty. The Bank came into
formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements,
where the United Nations Monetary and Financial Conference that led to their establishment took place (1 July-
22 July 1944). Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 ($250m to
France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). The World Bank
Group is headed by Paul Wolfowitz, appointed on June 1, 2005. Wolfowitz, a former United States Deputy
Secretary of Defense and well-known neo-conservative, was nominated by George W. Bush to replace James D.
Wolfensohn. By convention, the Bank President has always been a US citizen, while the Managing Director of
the IMF has been a European. Although nominated by the US Government, the World Bank President is subject
to confirmation by the Board of Directors. The President serves a term of five years, which may be renewed.

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Organizational structure
Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank
Group. The Group's headquarters are in Washington, D.C. It is an international organization owned by member
governments; although it makes profits, these profits are used to support continued efforts in poverty reduction.
Technically the World Bank is part of the United Nations system, but its governance structure is different: each
institution in the World Bank Group is owned by its member governments, which subscribe to its basic share
capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all
countries but there are also additional votes which depend on financial contributions to the organization.
As a result, the World Bank is controlled primarily by developed countries, while clients have almost
exclusively been developing countries. Some critics argue that a different governance structure would take
greater account of developing countries' needs. As of November 1, 2006 the United States held 16.4% of total
votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%. As major decisions
require an 85% super-majority, the US can block any such major change.
World Bank Group agencies
The World Bank Group consists of
· the International Bank for Reconstruction and Development (IBRD), established in 1945, which
provides debt financing on the basis of sovereign guarantees;
· the International Finance Corporation (IFC), established in 1956, which provides various forms of
financing without sovereign guarantees, primarily to the private sector;
· the International Development Association (IDA), established in 1960, which provides concessional
financing (interest-free loans or grants), usually with sovereign guarantees;
· the Multilateral Investment Guarantee Agency (MIGA), established in 1988, which provides insurance
against certain types of risk, including political risk, primarily to the private sector; and,
· the International Centre for Settlement of Investment Disputes (ICSID), established in 1966, which
works with governments to reduce investment risk.
The term "World Bank" generally refers to the IBRD and IDA, whereas the World Bank Group is used to refer
to the institutions collectively. Governments can choose which of these agencies they sign up to individually.
The IBRD has 185 member governments, and the other institutions have between 140 and 176 members. The
institutions of the World Bank Group are all run by a Board of Governors meeting once a year. Each member
country appoints a governor, generally its Minister of Finance. On a daily basis the World Bank Group is run by
a Board of 24 Executive Directors to whom the governors have delegated certain powers. Each Director

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represents either one country (for the largest countries), or a group of countries. Executive Directors are
appointed by their respective governments or the constituencies.
The agencies of the World Bank are each governed by their Articles of Agreement that serve as the legal and
institutional foundation for all of their work. The Bank also serves as one of several Implementing Agencies for
the UN Global Environment Facility (GEF).
Activities of the Bank
The chief objectives of the bank, as stated in the articles of agreement, are “to assist in the reconstruction and
development of territories of members by facilitating the investment of capital for productive purposes [and] to
promote private foreign investment by means of guarantees or participation in loans [and] to supplement private
investment by providing, on suitable conditions, finance for productive purposes out of its own capital…”
The bank grants loans only to member nations, for the purpose of financing specific projects. Before a nation
can secure a loan, advisers and experts representing the bank must determine that the prospective borrower can
meet conditions stipulated by the bank. Most of these conditions are designed to ensure that loans will be used
productively and that they will be repaid. The bank requires that the borrower be unable to secure a loan for the
particular project from any other source on reasonable terms and that the prospective project be technically
feasible and economically sound. To ensure repayment, member governments must guarantee loans made to
private concerns within their territories. After the loan has been made, the bank requires periodic reports both
from the borrower and from its own observers on the use of the loan and on the progress of the project.
In the early period of the World Bank's existence, loans were granted chiefly to European countries and were
used for the reconstruction of industries damaged or destroyed during World War II. Since the late 1960s,
however, most loans have been granted to economically developing countries in Africa, Asia, and Latin
America. In the 1980s the bank gave particular attention to projects that could directly benefit the poorest
people in developing nations by helping them to raise their productivity and to gain access to such necessities as
safe water and waste-disposal facilities, health care, family-planning assistance, nutrition, education, and
housing. Direct involvement of the poorest people in economic activity was being promoted by providing loans
for agriculture and rural development, small-scale enterprises, and urban development. The bank also was
expanding its assistance to energy development and ecological concerns
Criticism:
The World Bank has long been criticized by a range of non-governmental organizations and academics. In
addition the Bank's internal evaluations can produce negative conclusions. It has been accused of being a US or
Western tool for imposing economic policies that support Western interests. Critics argue that the free market
reform policies — which the Bank advocates in many cases — in practice are often harmful to economic
development if implemented badly, too quickly ("shock therapy"), in the wrong sequence, or in very weak,

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uncompetitive economies. In Russia, for example, shock therapy has raised poverty from 2 million to 60
million, a 3000% increase. UNICEF noted that this resulted in 500,000 'extra' deaths per year.
The World Bank has been criticized because of a perceived conflict between their stated goals, and their actual
goals. Critics argue that the adverse effects created by the World Bank are apparent when observing the
numerous countries on the African continent which are in essence “owned” by the World Bank. National debt is
common in many African countries, especially those being “helped” by the World Bank. This is due in part to
the economic ideals used to work in this extremely impoverished region. Water and sanitation are needed, yet
the companies that bring that to the poorest people in the world are large westernized companies out to make
profit. Because the World Bank supports these enterprises, critics cite that the organization makes the poor
poorer and the rich richer. Following decolonization, many African countries were ruled by dictators. These
corrupt dictators took the financial support lent by the World Bank, and began to build an enormous national
debt in their countries. Despite harsh criticisms, the World Bank is one of the most highly-regarded financial
institutions in the world, especially in the field of development economics and related research. In addition,
World Bank standards and methods have been adopted in many areas such as transparent procedures for
competitive procurement and environmental standards for project evaluation. World Bank also engages in
funding the education of a few promising young people from developing countries through its graduate
scholarship programs.

10.8 World Trade Organisation (WTO):
World Trade Organization (WTO), international body that promotes and enforces the provisions of trade laws
and regulations. The World Trade Organization has the authority to administer and police new and existing free
trade agreements, to oversee world trade practices, and to settle trade disputes among member states. The WTO
should follow these fundamental principles of trading.
· A trading system should be free of discrimination in the sense that one country cannot privilege a
particular trading partner above others within the system, nor can it discriminate against foreign
products and services.
· A trading system should tend toward more freedom, that is, toward fewer trade barriers (tariffs and non-
tariff barriers).
· A trading system should be predictable, with foreign companies and governments reassured that trade
barriers will not be raised arbitrarily and that markets will remain open.
· A trading system should tend toward greater competition.
· A trading system should be more accommodating for less developed countries, giving them more time to
adjust, greater flexibility, and more privileges.

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Dispute Resolution:
Apart from hosting negotiations on trade rules, one of the principal functions of the WTO is to act as an arbiter
of disputes between member countries. Countries can bring disputes to the WTO's Dispute Settlement Body
(DSB) if they believe another member has breached WTO rules. The DSB is the WTO General Council acting
in a specialized role under a separate chair. It administers the Understanding on Rules and Procedures
Governing Settlement of Disputes (DSU), which regulates dispute settlement under all covered WTO
agreements.
Disputes are heard by a Dispute Settlement Panel, usually made up of three trade officials. The panels meet in
secret and are not required to alert national parliaments that their laws have been challenged by another country.
Either side can appeal a panel's ruling. Appeals have to be based on points of law such as legal interpretation -
they cannot re-examine existing evidence or examine new issues. Each appeal is heard by three members of a
permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the
range of WTO membership. Members of the Appellate Body have four-year terms. They have to be individuals
with recognized standing in the field of law and international trade, not affiliated with any government. The
appeal can uphold, modify or reverse the panel's legal findings and conclusions. Normally appeals should not
last more than 60 days, with an absolute maximum of 90 days. The Dispute Settlement Body has to accept or
reject the appeals report within 30 days - and rejection is only possible by consensus.
Unlike most other international organizations, the WTO has significant power to enforce its decisions through
the authorization of trade sanctions against members which fail to comply with its decisions.
The WTO dispute settlement system has been quite active since the founding of the organization. Proceedings
have produced a huge corpus of what is sometimes called WTO law.
If decisions of the Dispute Settlement Body are not complied with, it may authorize "retaliatory measures" -
trade sanctions - in favour of the member(s) which brought the dispute. While such measures are a strong
mechanism when applied by economically powerful countries like the United States or the European Union,
when applied by economically weak countries against stronger ones, they can often be ignored. This has been
the case, for example, with the March 2005 Appellate Body ruling in case DS 267, which declared US cotton
subsidies illegal.
In order to assist developing countries overcome their limited expertise in WTO law and assist them in the
management of complex trade disputes, an Advisory Centre on WTO Law was established in 2001. The aim is
to level the playing field for these countries and customs territories in the WTO system by enabling them to
have a full understanding of their rights and obligations under the WTO Agreement
Historical Backdrop of the WTO:

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The Bretton Woods Conference of 1944 proposed the creation of an International Trade Organization (ITO) to
establish rules and regulations for trade between countries. Members of the UN Conference on Trade and
Employment in Havana agreed to the ITO charter in March 1948, but ratification was blocked by the U.S.
Senate. Some historians have argued that the failure may have resulted from fears within the American business
community that the International Trade Organization could be used to regulate big business.
Only one element of the ITO survived: the General Agreement on Tariffs and Trade (GATT). Seven rounds of
negotiations occurred under the GATT before the eighth round - known as the Uruguay Round — which began
in 1986 and concluded in 1995 with the establishment of the WTO. The GATT principles and agreements were
adopted by the WTO, which was charged with administering and extending them and approximately 30 other
agreements and resolving trade disputes between member countries. Unlike the GATT, the WTO has a
substantial institutional structure.
The WTO began operation on January 1, 1995. GATT and the WTO coexisted until December 1995, when the
members of GATT met for the last time. Although the WTO replaced GATT, the trade agreements established
by GATT in 1994 are part of the WTO agreement. However, the WTO has a significantly broader scope than
GATT. GATT regulated trade in merchandise goods. The WTO expanded the GATT agreement to include trade
in services, such as international telephone service, and protections for intellectual property—that is, creative
works that can be protected legally, such as sound recordings and computer programs. The WTO is also a
formally structured organization whose rules are legally binding on its member states. The organization
provides a framework for international trade law. Members can refer trade disputes to the WTO where a dispute
panel composed of WTO officials serves as arbitrator. Members can appeal this panel’s rulings to a WTO
appellate body whose decisions are final. Disputes must be resolved within the time limits set by WTO rules.
All of the 128 nations that were contracting parties to the new GATT pact at the end of 1994 became members
of the WTO upon ratifying the GATT pact. There are 150 member states in the organization, the latest to join
being Vietnam on January 11, 2007. Russia is expected to join the WTO in mid 2007. Pascal Lamy is the
current Director-General of the World Trade Organization. The WTO is based in Geneva, Switzerland, and is
controlled by a General Council made up of member states’ ambassadors who also serve on various subsidiary
and specialist committees. The ministerial conference, which meets every two years and appoints the WTO’s
director-general, oversees the General Council.
Criticism:
The stated aim of the WTO is to promote free trade and stimulate economic growth. Many people argue that
free trade does not make ordinary people's lives more prosperous but only results in the rich (both people and
countries) becoming richer. WTO treaties have also been accused of a partial and unfair bias toward
multinational corporations and wealthy nations.

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Critics contend that small countries in the WTO wield little influence, and despite the WTO aim of helping the
developing countries, the influential nations in the WTO focus on their own commercial interests. They also
claim that the issues of health, safety and environment are steadfastly ignored.
Martin Khor argues that the WTO does not manage the global economy impartially, but in its operation has a
systematic bias toward rich countries and multinational corporations, harming smaller countries which have less
negotiation power. Some examples of this bias are:
· Rich countries are able to maintain high import duties and quotas in certain products, blocking imports
from developing countries (e.g. clothing);
· The increase in non-tariff barriers such as anti-dumping measures allowed against developing countries;
· The maintenance of high protection of agriculture in developed countries while developing ones are
pressed to open their markets;
· Many developing countries do not have the capacity to follow the negotiations and participate actively
in the Uruguay Round; and
· The TRIPs agreement which limits developing countries from utilizing some technology that originates
from abroad in their local systems (including medicines and agricultural products).
Jagdish Bhagwati, although pro-free trade and pro-globalization, has strongly criticized the introduction of
Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement into the WTO/GATT framework. His
fear is that other non-trade agendas might overwhelm the organization's function.
Many non-governmental organizations, such as the World Federalist Movement, are calling for the creation of a
WTO parliamentary assembly to allow for more democratic participation in WTO decision making. Dr Caroline
Lucas recommended that such an assembly "have a more prominent role to play in the form of parliamentary
scrutiny, and also in the wider efforts to reform the WTO processes, and its rules". However, Dr Raoul Marc
Jennar argues that a consultative parliamentary assembly would be ineffective for the following reasons:
· It does not resolve the problem of “informal meetings” whereby industrialized countries negotiate the
most important decisions;
· It does not reduce the de facto inequality which exists between countries with regards to an effective and
efficient participation to all activities within all WTO bodies;
· It does not rectify the multiple violations of the general principles of law which affect the dispute
settlement mechanism.
Check Your Progress 3
Note: Use the space given below for your answer. Also check your answer with the model answer given at the
end of the Unit.

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Q. 1 What are the functions of ILO?
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Q. 2 “IMF, World Bank and the WTO has now become the tool of US to exploit the developing countries”.
Comment.
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10.9 Let Us Sum Up:
To sum up, the United Nations is assisted by a myriad of organisations and specialised agencies that focus on
specific issues such as humanitarian assistance, socio-economic and technical development, as well as
educational issues ranging from the environment to population, human rights, children welfare, and the role of
women.
The World Bank Group and the IMF have made important development loans sought after by the developing
world and have made policy changes in debt forgiveness and the way in which loans affect the poor. UNICEF
provides healthcare, nutrition for children (and mother), and emergency relief for children during crisis and
funds water supply and sanitation projects that affect children. ILO works to improve labour conditions,
promote productive employment and social progress, and raise living standards. UNESCO’s purpose is to
contribute to peace and security by promoting international collaboration through education, science, and
culture in order to further universal respect for justice, the rule of law, and the human rights and fundamental
freedoms proclaimed in the UN Charter. WTO promotes and enforces the provisions of trade laws and
regulations

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10.10 Some Useful Books:
1) LeRoy Bennett, International Organisations: Principles and Issues, New Jersey: Prentice Hall Inc.,
1998
2) Kalpana Rajaram (ed.), International Organisations, Conferences and Treaties, New Delhi: Spectrum
Books, 2005.
3) Jean E. Krasno (ed.), The United Nations: Confronting the Challenges of a Global Society, London:
Lynne Rienner Publishers, 2004