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A. The Bretton Woods Agreement. The modern multilateral international

economic system was shaped largely by what is known as the Bretton Woods
Agreement.
1 History. Prior to the end of World War Il but after the Normandy landings
had taken place, the Allied forces entered into an agreement as to how to ensure
that another World War would not take place. They had realized that the Second
World War was triggered in part by questionable economic policies which
severely affected and enraged Germans, stoking a fire which would lead to the
rise of the Nazis. In order to avoid this, institutions and agreements were made at
Bretton Woods which resulted in the creation of the International Monetary Fund
or IMF, the International Bank for Reconstruction and Development or IBRD, and
the International Trade Organization or ITO. Of these organizations, the IMF
survives up to this day, and the IBRD survives but is better known as the World
Bank. As for the ITO, although the GATT conferences that were supposed to
lead to its formal creation took place beginning 1946, the ITO itself did not
materialize as planned but its role was taken over by the World Trade
Organization or WTO which was founded in 1995.

B. International Monetary Fund. Formally came into existence on December 1945

when the Articles of Agreement of the International Monetary Fund were signed.
1 Purpose. The IMF's primary purpose is to ensure the stability of the
international monetary system. This is achieved by providing reserves to
countries with liquidity or balance of payment problems. Such financial
assistance is more akin to a loan than a dole out.
2 Authority. The IMF is headed by its Board of Governors. As for the day-
to-day business, this is handled by the Executive Board.
3 Value. The quota of each member in the IMF determines the amount of
money they can draw, as well as their voting power.
4 Funding. The IMF obtains funds from its members either by borrowing
from its members, or from the interest paid by members who loaned from the
IMF.
5 Conditionality Policy. The IMF grants loans with conditions that must be
met. As such, the IMF has been criticized as a political tool that forces States to
act in a certain way in exchange for much needed resources.
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6 Accessibility. Compared to commercial rates, the IMF extends loans at a

lower rate. Likewise, unlike commercial lenders, the IMF is known to extend
loans even for projects and enterprises that commercial institutions would not
normally finance. Nevertheless, this easy access to funding must always be seen
in the light of IMF's conditionality policies.
7 Special Drawing Rights. Special Drawing Rights, or SDR, is best
described as a basket of various currencies. It is the main unit of account in the
IMF and what member States obtain when they draw from the IMF. The
currencies that go into the SDR are specially chosen by the IMF to promote the
stability of the international monetary system.

C. The World Bank Group. Although its Articles of Agreement were signed during
the Bretton Woods Conference in July 1944, the inaugural meetings of its Board of
Governors were not until 1946. Over the years, the World Bank has expanded. From
being a single organization, the World Bank is now a group of five institutions which
make up the World Bank Group or WBG. These institutions are the World Bank itself,
the International Development Association or IDA, the International Finance Corporation
or IFC, the Multilateral Investment Guarantee Agency or MIGA, and the International
Centre for the Settlement of Investment Disputes or ICSID. Note that the IBRD Articles
of Agreement were amended in February 1989.
1. The World Bank. As a specialized agency of the UN, the World Bank, which
is formerly the IBRD, has the purpose of promoting economic growth and a trade
equilibrium by facilitating the investment of capital for purposes that would further
this end. This is a modification of the initial purpose of the IBRD which was to
finance the reconstruction of Europe.
a. Exclusivity. Only those States which are members of the IMF can
be members of the World Bank. Consequently, only members of the World
Bank can obtain loans from it.
b. Source of Funding. The World Bank sources its funds from its
members. Another source of its funds would be the interest it charges on
the loans it extends.
c. Nature of funds. The funds given by the World Bank are loans, not
dole-outs. These loans are provided at conventional rates are only
extended to governments or government backed private entities. The
World Bank has been known to provide guarantees for foreign investors
and provide technical assistance in matters related to international
finance.
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d. Nature of approved projects. Most of the approved projects which

allow the government to receive loans from the World Bank are
infrastructure projects, particularly those dealing with electricity and
transportation.
2. International Development Association. The IDA offers loans at better
terms compared to the World Bank. Among these terms include no interest
except for minimal service charges, and a longer and more flexible schedule of
payments.
3. International Finance Corporation. The IFC, unlike the World Bank, is
enabled to extend loans to private enterprises even absent a repayment
guarantee from the domestic government of that enterprise.
4. Muttitaterat Investment Guarantee Agency. The mandate of the MIGA
is to insure investments in developing countries against non-commercial risks.
5. International Center for the Settlement of Investment Disputes. Based
at the World Bank headquarters in Washington D.C., the ICSID was created as a
body where disputes between contracting States and foreign investors can be
settled. One of the main reasons behind its creation was to encourage private
investment by giving them a means to platform upon which to sue States in case
disputes arise in the course of the investment, thus quelling the fear of arbitrary
and uncompensated expropriation.
a. Jurisdiction. Under Article 25 of the Washington Convention on the
Settlement of Investment Disputes between States and Nationals of other
States, the ICSID is given jurisdiction over any legal dispute arising
directly out of investment between a contracting State or any of its
agencies and a national of another contracting State. However, both
parties must give their consent to the ICSID in writing before the ICSID
can take jurisdiction. Furthermore, once both parties have already given
their consent, neither party may unilaterally revoke the same.
b. Characterization. The ICSID is better characterized as a framework
for resolving disputes rather than a tribunal per se. The ICSID maintains a
list of persons, also known as a panel, who can act as conciliators or
arbitrators. Each State party may assign up to four persons to both the
panel of conciliators and the panel of arbitrators.
c. Modes of Settlement. Under ICSID, disputes can be settled either
through conciliation or arbitration. Of these modes, the most regular mode
availed of is arbitration.
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d. Competence. Both under conciliation and arbitration, the panel

shall have competence de la competence. This means that the panel shall
be competent to decide whether or not it can take jurisdiction.
e. Self-Contained Proceedings. Once lcs1D proceedings are
engaged, all other remedies are deemed excluded. The exception to this
is if the rule on exhaustion of remedies was not followed. Furthermore,
diplomatic protection cannot be invoked during ICSID proceedings, and
any decision cannot be appeal to local courts.
f. Monetary Awards. State parties under the ICSID are treaty bound
to recognize and enforce all pecuniary obligations imposed as awards by
the ICSID tribunals. Although a State may still refuse to pay the same on
account of State immunity, this refusal would amount to a violation of the
Washington Convention on the Settlement of Investment Disputes
between States and Nationals of other States, therefore giving rise to
another liability under international law.
g. The Philippines and ICSID. The Philippines has been a party to a
handful of highly publicized cases before the ICSID. Among these are the
Frapport cases which involved the construction of the NAIA 3 Airport
Terminal, the Baggerwerken case which involved the termination of a
contract regarding the rehabilitation of Laguna Lake, and the Shell case
which involved a tax dispute with the government over Malampaya.
Currently, the Philippines lost the Baggenverken case, won the Frapport
case, and is still awaiting the results of the Shell case.

D. The United Nations. With regard to international economic law, there are
several organizations that affect how the law is shaped, including the International
Labour Organization and the International Maritime Organization. Among these
organizations, the most primary would be the United Nations given its size, purpose,
and coordination with other specialized agencies.
1. Economic Provisions. In Article 1, paragraph 3 of the UN Charter, it is
expressly Stated that one of the purposes of the United Nations is to achieve
international cooperation in solving international problems of an economic
character. Likewise, Article 13, paragraph 1 (b) reaffirms this by making it a duty
of the UN General Assembly to initiate studies and make recommendations for
the purpose of promoting international cooperation in the economic field.
Furthermore, the UN Charter itself has a chapter devoted international economic
and social cooperation which is made up of articles 55-60. [Also see: UN General
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Assembly Resolution 3281 or the Charter of Economic Rights and Duties of

States]
2. UNCTAD. The United Nations Conference on Trade and Development or
UNCTAD was first convened in 1964 but eventually became one of the
permanent organs of the UN General Assembly. As an organ of the General
Assembly, it is primarily tasked with the realization of the General Assembly's
mandate of initiating studies and making recommendations in order to promote
international cooperation in the economic field. In order to do this, the UNCTAD
has formulated trade policies, initiated multilateral trade agreements, worked on
codes of conduct for non-State actors engaged in international economic
transactions, and acted as a platform where diverse economic policies can be
harmonized into standard rules.

E. Organization for Economic Cooperation and Development. Another

important organization involved in the field of international economic law is the
Organization for Economic Cooperation and Development or OECD. Established in
1961 as a successor of the Organization of European Economic Cooperation, the
OECD strives to promote growth, full employment, financial stability, and a trading
system which would promote multilateral and non-discriminatory dealings between
States. Although the OECD only has 35 members at time of writing, and most, if not all,
these member countries are developed States, the OECD has contributed to the
development of the field of international economic law by contributing economic
research and financial guidelines meant to aid capital movements and multinational
enterprises.

F. Economic Integration.
1. Free Trade Areas.
a. Definition. Groups of countries, usually geographical neighbors,
who agree to lessen or remove tariff and non-tariff barriers on traded
goods and services coming from their respective territories. As such, an
advantage is created for goods and services being traded within the Free
Trade Area or FTA, rather than outside it.
b. GATT Restrictions. Under Article XXIV, paragraph 5 of the GATT,
although better rates of duties and other regulations can be given to
members of an FTA, the treatment accorded to WTO members not in the
FTA must still comply with GATT standards. Likewise, and FTA cannot be
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used to subject States to higher rates of duties and restrictions than

allowed by the GATT.
c. Outside Trade. Each State in an FTA is still allowed to trade
independently with other States outside the FTA.
d. Limited Integration. In an FTA, all that is created is a common
market for goods and services within the FTA through the lowering of tariff
and non-tariff restrictions. No other forms of integration, such as currency
integration or removal of borders, occur at the level of FTAs.
Partial and Futz FTAs. A partial FTA will only involve specific goods and
services. As such, the general rule is that all products and services not
expressly included are excluded. On the contrary, a full FTA involves all
goods and services but allows for possible exclusions. As such, the
general rule for a full FTA is that all goods and services are included
except for those specifically excluded.
f. Criticisms. Criticisms of FTAs include that they oversimplify a complex
situation. Although free trade in itself is a positive development, in reality,
it is harder to keep track of the benefits
an importer or exporter is entitled to because States often have several
overlapping trade agreements with rates and rules of origin that are not
harmonized. As such, the burden is shifted to importers and exporters to
decipher which trade agreement applies to the goods they are dealing
with, and consequently, which rules of origin and preferential rate to use.
Given the complexity of this matter, a tendency for unlawful acts such as
technical smuggling may arise.
2. Customs Unions. These are similar to FTAs except that the members of
the Customs Union or CU have agreed to deal with non-members no longer
independently, but as a group through a common external trade policy. An
example of this is the EU-Turkey Customs Union.
3. Common Markets. This is similar to CU except that services and capital
are allowed to free movement through the territory of member States. However,
despite such free movement, each member State is still free to regulate its own
domestic market by employing standards and other measures. An example of a
common market is the MERCOSUR which is made up of Argentina, Brazil,
Uruguay, Paraguay, and Venezuela.
4. Single Market. Also known as an economic union, a single market is
characterized by free movement not only of services and capital, but also of
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labor. Furthermore, unlike common markets, economic and fiscal policies of

members of a single market are harmonized.
a. European Union. The European Union or EU is a single market. Aside
from having its own supra national legal personality separate from its
members, the members of the EU are deeply integrated, with supra-
national institutions. Currently the most advanced system of economic
integration between States in existence, the EU generally has free mobility
between borders for all citizens of its member States, as well as goods
originating from within their territories.

5. Monetary Union. A monetary union has been described as an

advancement towards total integration taken by members of a single market.
Among the defining features of a monetary union is the use of the same
currency, same exchange rate, and same financial standards and practices by
member States. Notably, the EU is considered a monetary union as shown by its
use of a shared common currency known as the Euro.
a. Mere Currency Sharing. The mere fact that a single currency is being
shared by several States does not automatically mean that a monetary
union exists between them. By way of example, Kiribati and Tuvalu use
the Australian Dollar but it would be incorrect to claim that a monetary
union existed between Kiribati, Tuvalu, and Australia.
6. Political Union. When States have already attained economic integration
by becoming a single market and a monetary union, the last step towards full
integration would be the harmonization of political institutions and policies. The
end result of such integration would be the rise of a single State comprised of the
member States that entered into political integration. An example of this would be
the United States of America which is comprised of 50 States.
G. General Agreement on Tariffs and Trade.
1. History. The economic events between the First and Second World War
revealed a great need for multilateral disciple in the field of international trade.
Coming together in February 1946, the United Nations Economic and Social
Council convened and drafted a suggested charter for the International Trade
Organization. Simultaneously, the General Agreement on Tariffs and Trade was
also being drafted as an agreement to embody the results of tariff negotiations.
2. The ITO Debacle. Although a draft charter of the International Trade
Organization was created, the failure of the US to ratify the same, due to the US
Congress withholding its approval, proved fatal to the International Trade
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Organization because other States became hesitant to join without US

participation. However, from the draft charter, the chapter on international trade
was culled to form a separate agreement known as the GATT.
3. Provisional Application. Subscribed to by 23 States including the US,
the GATT was initially intended to be a subsidiary agreement under the ITO.
Given this situation, along with domestic complications that jeopardized the
effectivity of the GATT, the member States would end up executing a Protocol of
Provisional Application in order to apply the GATT. Furthermore, given that the
GATT itself was not strictly an organization, the implementation of its provisions
was administered by the Interim Commission for the International Trade
Organization which was based in Geneva.
4. The First Seven Rounds. Despite the supposed provisional nature of the
GATT, negotiation rounds were successfully concluded under its auspices in
order to reach agreements relating to both tariff and non-tariff concessions. The
agreements concluded during these rounds would significantly impact the field of
international trade, leading to the reduction of worldwide tariff rates on
manufactured goods and the fixing of trade standards. In order, these first seven
rounds are the Geneva Round (1947), the Annecy Round (1948), the Torquay
Round (1950), the Geneva Round (1956), the Dillon Round (1960—1), the
Kennedy Round (1964-67), and the Tokyo Round (1973-79).
a. Policy Prior to Tokyo Rounds. Prior to the Tokyo Round, the main
purpose of the Rounds was tariff reduction. It was only in the Tokyo
Round that non-tariff agreements were created which the contracting
members were free but not obliged to join. Furthermore, following a trend
that started in the early 1960's, differential and more favorable treatment
was now given to developing States.
5. The Eighth Round. During the eighth round, also known as the Uruguay
Round, which began in 1986 and ended in 1994, several comprehensive
agreements involving goods, services, and property rights would be negotiated.
Unlike previous agreements which were mere amendments of existing
agreements, the Uruguay Round Final Act is distinct insofar as it was treated as
a new agreement which embodies both the creation of the World Trade
Organization and the 1947 GATT with its related agreements as annexes. This
document is also known as the Marrakesh Agreement. An interesting facet of the
Marrakesh Agreement is that it embodies the spirit of the Uruguay Round insofar
as it seeks to expand the coverage of the multilateral trading system to both
developed and developing States with the end goal of promoting development
and growth through trade.
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6. GATT Today. Note that the 1994 GATT has superseded the 1947 GMT.

H. World Trade Organization.

1. History. During the Uruguay Round, a proposal was submitted for the
creation of a new institution similar to the proposed International Trade
Organization decades earlier. After more negotiations, the Marrakesh Agreement
was signed in 1994 and entered into force in 1995. Contained in the Marrakesh
Agreement was the Agreement Establishing the World Trade Organization which
established the World Trade Organization. [Note: for purposes of expediency,
and to differentiate it from other WTO Agreements, the Agreement Establishing
the World Trade Organization shall now be referred to as the WTOA (not official
abbreviation).]
2. Functions. Aside from providing a forum where States can review and
negotiate trade agreements, the WTO also provides a system where States can
resolve trade related disputes.
3. Objectives. The main objective of the WTO Agreements is to foster
competition and trade among members.
a. Novelty. The WTO Agreements are novel insofar as they include
agreements not only regarding trade in goods but also trade in services,
and trade related intellectual property issues. These agreements also
cover a number of other fields including anti-dumping measures, technical
standards, and customs valuations. Furthermore, these WTO Agreements
are considered as binding legal obligations which affect both the global
and the domestic marketplace. Notably, any disputes regarding
obligations falling under these agreements are cognizable by the Dispute
Settlement Body of the WTO.
b. Balancing Act. Although the WTO Agreements were meant to
enable products from member States to freely enter into the markets of
other States, the WTO Agreements likewise permit tariffs and non-tariff
measures to be imposed by member States, but only under specific
conditions only. An example of this would be the safeguard measures
which are allowed only during emergency situations as provided for in
Article XIX of the GATT, and the Agreement on Safeguards.
c. Piece-meat GATT. Generally speaking, States are no longer at
liberty to pick and choose which GATT provisions will apply to them.
Although there are existing exceptions to this rule, such as agreements
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involving trade in dairy and bovine products, these exceptions are slowly
being terminated.
4. Most Favored Nation Clause.
a. Purpose. The Most Favored Nation clause or MFN is considered
one of the most fundamental pillars of the global multilateral trading
system. Contrary to its name, the MFN is meant to ensure that no
particular State gets special treatment with regard to trade. As such, and
to the extent provided under Article 1 of the GATT, a benefit given to one
member country regarding the import or export of a product must also be
given to other member countries. Simply put, member States cannot
discriminate against each other with regard to trade.
5. Membership. The WTO's membership is based on governments, not
States. Thus, Taiwan, Hong Kong, and Macau are all members despite their
Statehood not being recognized under international law.
a. Contracting Parties. Those who signed the GATP prior to the
Marrakesh Agreement are referred to as GATP Contracting Parties.
b. WTO Members. Those who signed the Marrakesh Agreement,
whether they previously signed the GATT or not, are known as WTO
Members.
i. Original Members. All contracting parties to the GATT who
signed the Marrakesh Agreement are considered original members
to the WTO.
ii. Members by Accession. All members that are not original
members are members by accession. Unlike original members, the
members by accession need to enter into negotiations with the
members of the WTO in order to discuss the terms of their
accession. After which, a 2/3 vote by the members of the WTO
Ministerial Conference is still required before accession can take
place. The latest WTO member by accession is Afghanistan which
acceded on July 29, 2016.
8. Structure. The Ministerial Conference is the highest, followed by the
General Council. Below them are subsidiary bodies such as the Dispute
Settlement Body and the Trade Policy Review Board, other councils such as
those for trade in goods, or those for trade in services, the different committees
such as those for finance, or those for balance of payment restrictions, and the
Secretariat, which is headed by the Director General.
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9. Decision Making.
a. WTO Ministerial Conference. Made up of all the members of the
WTO, the Ministerial Conference is highest decision-making body of the
WTO. This conference usually takes place every two years, with the next
conference scheduled for December 2017 in Buenos Aires, Argentina.
b. WTO General Council Unlike the Ministerial Conference, the WTO
General Council is based in Geneva, handles the day to day running of
the WTO, and is the highest decision-making body when the Ministerial
Conference is not in session. Made up of representatives from the WTO
members, the WTO General Council is empowered to act on behalf of the
ministerial conference.
c. Consensus not Unanimous. As a general rule, unless otherwise
specified, decision making in the WTO is done by consensus. This means
that as long as no member opposes the decision, such as when they
merely stay silent during voting, the matter will be approved. Similarly, it
also means that each member in a consensus vote can stop a decision
simply by opposing it.
d. Non-Consensus Voting. To adopt an interpretation of a multilateral
trade agreement, a favorable 3/4 vote by the members of the Ministerial
Conference or General Council is needed. Likewise, a favorable 3/4 vote
by the members of the Ministerial Conference can waive an obligation
imposed on a particular member by a multilateral trade agreement.