The Organization`s stated objectives are to promote international economic cooperation, international trade, employment and exchange rate stability, including by providing Member States with financial resources to meet the needs of the balance of payments. IMF Member States have access to information on the economic policies of all Member States, the ability to influence the economic policies of other members, technical assistance in banking, tax and foreign exchange, financial assistance in times of payment difficulties and increased trade and investment opportunities. Voting rights at the IMF are based on a quota system. Each member has a number of “basic votes” (the basic number of votes of each member corresponds to 5.502% of the total), plus an additional vote for each special draw right (SDR) of 100,000 the rate of a member country. The special drawing right is the IMF`s unit of account and is a right to money. It is based on a basket of important international currencies. The basic votes create a slight distortion in favour of small countries, but the additional votes determined by the SDR outweigh this bias. Conversely, if your small business was a corn producer in Mexico, you may have seen another EFFECT of NAFTA on your small business when Mexico started buying most of its corn in the United States. As soon as the agreements go beyond the regional level, they need help. The World Trade Organization intervenes at this stage.
This international body contributes to the negotiation and implementation of global trade agreements. Some of these trade agreements exist between countries within certain geographic areas and countries with common borders (e.g., NAFTA or the Gulf Cooperation Council, also known as the GCC, which has six Arab states, namely Saudi Arabia, Oman, the United Arab Emirates, Kuwait, Bahrain and Qatar). On January 1, 1989, the United States and Canada implemented the U.S.-Canada Free Trade Agreement. On September 25, 1990, former President Bush informed Congress that the United States and Mexico intended to begin free trade negotiations. On February 5, 1991, the United States, Canada and Mexico issued a joint communiqué formally proposing a North American pact that “unites our three economies in a bold and different way.” Formal NAFTA negotiations began on June 12, 1991 and ended on August 12, 1992. The agreement was ratified on November 18, 1993 by the U.S. House of Representatives and two days later by the Senate. An unusual coalition of NAFTA opponents, which included labour and environmental activists, emerged as a result of issues related to wage gaps and job losses and environmental issues.
Nafta supporters were also diverse. The successful vote of 234 to 200 in the House of Representatives was mainly due to the support of Republican members. Robert Dole, a former Republican senator and 1996 presidential candidate, was instrumental in supporting NAFTA. Before the vote, all the former presidents showed up to show solidarity between the parties in favour of the trade agreement. In the final days leading up to the vote in the House of Representatives, President Clinton had to negotiate hard to make a majority decision. The question of whether the WTO fulfils its duty and fulfils its mission is the subject of ongoing debate. Yet the WTO currently has 104 members and 20 observer governments. WTO member countries account for nearly 97% of world trade and 98% of global GDP. As soon as the 20 observational governments become members, it is possible that the WTO will oversee the entire global economy. What began in Geneva in 1947 and which 23 nations focused exclusively on tariff reductions has become a truly global organization dealing with agriculture, labour standards, environmental issues, competition and intellectual property rights. The video below provides a good overview of the IMF and its role in promoting global trade. There are pros and cons of trade agreements.