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International Political Economy (IPE). International College Khon Kaen University Week 8 – Institutional Framework of IPE (1). Institutional Framework of IPE.

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International Political Economy (IPE)

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    1. International Political Economy (IPE) International College KhonKaen University Week 8 – Institutional Framework of IPE (1)

    2. Institutional Framework of IPE • Institutional framework refers to the organizations, agreements and conventions which provide structure to international dialogue and cooperation • The majority of the mechanisms for international cooperation are intergovernmental: national governments meet together and sign agreements they have negotiated • There are also mechanisms which do not involve governments: their participants are mainly businesses or civil society groups

    3. Institutional Framework of IPE • This week we will look at inter governmental networks and cooperation – all the ways in which governments from different countries work together, and why • bilateral relationships and diplomacy • regional and multilateral institutions • trade negotiations • Next week we will look at how global business operates and at the role of multinational corporations (MNCs) in IPE

    4. Bilateral Institutions of IPE • The issues covered by bilateral institutions can be very varied and broad • The nature of the relationship between the two countries will dictate the issues • Neighboring states sharing a common border generally have a wider range of issues to talk about than geographically distant states • In our more globalized world this distinction is fast disappearing

    5. Bilateral Institutions of IPE • Some examples of bilateral IPE issues: • Trade and investment • Border management (people and goods) • Resource issues – water, fishing rights, minerals • Transport and communications • Environmental issues – haze, pollution of shared rivers • Development assistance and cooperation • Border disputes • Security

    6. Bilateral Institutions of IPE • With only two parties, there is no need for the large, formal organizations and structures which feature in global and regional organizations • Remember, “institutions” don’t have to be organizations or permanent secretariats

    7. Bilateral Institutions of IPE • The main institutions of bilateral IPE relationships include: • Embassies and trade promotion offices • Bilateral trade and investment agreements (FTAs) • Bilateral cooperation and technical agreements • Ministerial visits • Trade missions • Familiarization visits • Joint commissions • Regular consultations – often scheduled on an annual basis (or six-monthly, or every two years)

    8. Regional Institutions of IPE • Cooperation and collective action on a regional basis has increased sharply since the 1980s • States can advance their economic, social and security welfare by working with neighboring states to: • establish regional organizations which support and service their cooperative efforts • sign regional treaties and trade agreements to provide a binding legal framework for their decisions

    9. Regional Institutions of IPE • Regional institutions are generally concerned primarily with: • Trade and economic cooperation (ASEAN, EU, NAFTA, Mercosur, APEC, etc) • Security (NATO, ASEAN Regional Forum, etc) • Development and social cooperation (ADB, ESCAP, SEAMEO, etc) • The region covered by each grouping may be an entire continent, or as few as three or four countries which see benefit in working together

    10. Regional Institutions - Asia • For the purposes of this IPE course we will look more closely at the following Asian regional groupings: • ASEAN (including AFTA and AEC) • The ADB • ESCAP • There are many other organizations and groupings, even within Asia, but these are the “big 3” for IPE purposes

    11. Regional Institutions - ASEAN • The Association of South East Asian Nations (ASEAN) was established in 1967 by: • Indonesia • Malaysia • Philippines • Singapore • Thailand • Then joined later by: • Brunei Darussalam (1984) • Vietnam (1995) • Lao PDR (1997) • Myanmar (1997) • Cambodia (1999)

    12. Regional Institutions - ASEAN • The ASEAN Declaration (1967) states its aims are: • “Accelerate economic growth, social progress and cultural development in the region” • “Promote regional peace and stability” • In 2003, ASEAN leaders agreed to establish an “ASEAN Community” by 2020 comprising: • An ASEAN Security Community • An ASEAN Economic Community • An ASEAN Socio-cultural Community

    13. Regional Institutions - ASEAN • The ASEAN Economic Community aims to “create a stable, prosperous and highly competitive economic region…withequitable economic development and reduced poverty” • Will build on the present ASEAN Free Trade Area (AFTA), and extend the range and depth of free trade agreements with non-ASEAN countries • Will implement a roadmap of eight defined new initiatives in financial and monetary integration, and in sectors like tourism, transportation, telecommunications and energy

    14. Regional Institutions - ADB • The Asian Development Bank (ADB) mission is to “help its developing member countries reduce poverty and improve the quality of life of their people” • Its core business is to lend money on concessionary terms to developing country members – mainly to governments, but also to, or through, NGOs and private enterprises • Also provides some technical assistance and grants • Acts as “financial adviser” to regional governments on growth and development issues

    15. Regional Institutions - ADB • ADB’s region extends from the Pacific islands in the east to Afghanistan and Pakistan in the west • Its 67 members includes 48 from the region, and 19 (all donors) from other parts • ADB’s priorities: • Assisting states to meet the Millennium Development Goals (MDGs) • Reducing disparities both within and between countries

    16. Regional Institutions - ESCAP • The Economic and Social Commission for Asia and the Pacific (ESCAP) is the regional development arm of the UN for the Asia-Pacific region • It focuses on issues that need to be addressed through regional cooperation: • issues countries have in common • trans-boundary issues • issues requiring regional solutions • Is the biggest of the UN’s five regional commissions in terms of population served and area covered

    17. Regional Institutions - ESCAP • Does much useful work for its 58 regional members in macroeconomic and statistical analysis, research on MDGs and other development issues • Has a staff of more than 600, working in eight main development areas • Is often criticized for being long on words (developing programmes and producing lengthy documents) but short on action

    18. Multilateral Institutions of IPE • For most multilateral (global) issues, the most important intergovernmental organization is the United Nations and the many agencies, funds and programmes of the “UN family” • In international economic relations, three major inter-governmental organizations are important: • The World Trade Organization (WTO) • The International Monetary Fund (IMF) • The World Bank group

    19. The World Trade Organization (WTO) • The World Trade Organization is the only international organization regulating trade between states • Created in 1995 to implement the General Agreement on Trade and Tariffs (GATT) • Is not formally part of the UN • Has three main goals: • Help the free flow of world trade • Help negotiate further opening of markets • Settle trade disputes between its members

    20. The WTO : Principles • The WTO establishes a framework for trade policies – it helps member countries agree on the rules of international trade • The main principles: • Non-discrimination – the most favoured nation (MFN) rule and the national treatment rule • Reciprocity • Binding and enforceable commitments • Transparency

    21. The WTO : Principles • The MFN rule requires that a member must apply the same conditions for all WTO member countries • The national treatment rule requires that imported goods must be treated no less favorably than domestically produced goods • Reciprocity means that in every negotiation every party must make concessions

    22. The WTO • Since its establishment, the WTO has worked hard to secure trade deals, particularly in such areas as services • The WTO’s policing, enforcement and dispute resolution mechanisms are having a positive effect • Most countries have adopted WTO recommendations for trade disputes • Membership has increased to 153, which represents 96% of world trade

    23. The World Trade Organization (WTO) • WTO Ministers launched a new round of trade talks at Doha, Qatar, in 2001 • The Doha Development Round is now into its tenth year and is already the longest trade round • The Doha agenda includes: • cutting tariffs on industrial goods and services • phasing out subsidies to agricultural producers • reducing barriers to cross-border investment • limiting the use of anti-dumping laws • increased emphasis on trade as a development tool

    24. The World Trade Organization (WTO) • Negotiations in the Doha Development Round have stalemated over: • European Union and US differences over farm tariffs and subsidies • Emerging economies reduction of industrial tariffs • “BRIC’s Factor” (Brazil, Russia, India, China) pushing for better services access to developed countries • The WTO suspended negotiations in late 2008 but informal negotiations have continued since