The New International Economic Order - Essay Example

?The New International Economic Order Introduction During the last 65 years the world economy has walked steadily on the path of economic liberalization where it has experienced the fall in tariffs with the establishment of the GATT (General Agreement on Tariffs and Trade) in 1947. The GATT after its completion of four rounds of negotiations by 1956 initiated the drop in thousands of tariffs that covered billions and dollars of the world trade. Eventually the GATT expanded in WTO (World Trade Organization) and the policies adopted by it affected the international exchange of services and intellectual property as well including the tariff and the non tariff barriers. In the past 65 years the international flow of capital has grown rapidly as a result of the removal of the trade barriers. The trade barriers had completely disappeared in the Northern side of the world and the developing countries of the world were gradually embracing the open market notions especially in the East Asia and the former Soviet Alliance (Rose, 2010, p. 169). But the aftermath of the Great Recession in the years 2007- 2009 has marked the reversal of these trends. And at an initial glance it seems as if the economic environment is headed towards a stunning reversal of the globalization. The reversal in the trend frightened the traders and the respected institutions started referring to the acts as “the protectionist juggernaut” and “widespread harm done by discriminatory state measures”. (Rose, 2010, p. 170) Nobel Laureate economist Paul Krugman is of the opinion that “when it comes to international trade, actually it’s not the Great depression, it’s worse.” (Rose, 2010, p. 170; Armstrong, Lloyd and Redmond, 2004, pp. 1-4) The New International Economic Order The New international and Economic order testifies the new states that had emerged from the decolonization to partake efficiently in the international life thereby participating in the activities that is occurring globally as a result of the globalization. The NIEO believed that the global economic system which is represented by the International Monetary Fund (IMF), the World Bank, and the GATT is based on liberal principles and is totally dominated by the few Western Powers led by the United States and therefore it did not met the contemporary needs of the hour. Hence in an attempt to change the present scenario it set a group of 77 to coordinate their position and demands by the help of the developed countries. This was highly criticized by the economists who were of the opinion that the underdevelopment in any country is completely and endogenously internal problem of the economy which is a result of some inadequacies and deficiency of the country itself. They opined that in order to address the inadequacy and the deficiency in the underdeveloped economy truly the nation has to analyze the root causes which were present in the imbalance of the international economic relations where the developed countries dominated with its established orders. Hence to break the vicious circle of underdevelopment the prime concern will be to address the relationship of dependence- domination which has restricted the countries of South from creating a true development strategy. This is the time when the debate on the prevailing economic order originated thereby implying a need to reshape the principles by disapproving the old ones. While the economists were engaged in the debate the jurist had a new approach to address the issue that is they brought in the concept of international development law which would take into considerations the rights and interest of the countries of South. This was a diversion from the conventional analysis of development issues but the third world countries viewed the approach as new and interesting but they were of the opinion that the approach did not consider the changes required to meet the demands. The analysis was carried forward by a series of proposals concerning the changes that are required in the aspect of international relations and development policies. The third world countries were disjointed and their economic sectors worked in total separations under a series of unconnected legal regimes and rules which subjected them to external interference. The need of the hour was an international action which would restructure each economy, linking the different sectors of the economy with each other in a mutual reinforced arrangement that is to sum it up helping in creating an integrated national economy. This would ensure that the economies are on the receiving ends of the world market under improved conditions rather than bearing its negative effects. The first step towards achieving its proposals were to gain the control over the economic levers and the management of the natural wealth and resources of the economy to initiate the nationalization of the industries and to have a proper control of investments and mistake of transnational corporations. (Mahiou, 2011, pp. 1-2; Johnson, n.d., pp.5-6; Sneyed, n.d) The third world countries had a tendency to think that the International order stands no chance of improvement in the prevailing system of using traditional methods and techniques. In the 1970s the Group of 77 took a more significant turn as the South started making demands from the North. The action had occurred within the United Nations systems in the General Assembly and the United Nations Economic Commissions in Latin America and Africa; and this was taken up by the regional associations of the South- the Non Aligned Movement, the Organization of African Unity, the Organization of American States, the League of Arabs and many more of similar status. Their aim was to lay the foundation for the emergence of a new order which will be more equitable in nature. They also made an effort to overthrow the sources, institutions, the principles and the norms which followed the traditional international law. (Mahiou, 2011, p. 2; Engle, n.d) The treaties and customs were the main sources of the traditional international law which could answer the well established procedures. But international development laws distance it to temper the unnecessary formalism and rigidity of treaties and thereby lowering the pace of the constituting the custom which favored the more non rigid rules as the different acts of the international organizations. It thus revived the argument on the obligatory nature. The cooperation of the States and the institutions become fruitful only when the burning issue of the generation is addressed- the problem of unemployment. Thus the international institution have been provided with the clear objective that measures should be taken in assessing and analyzing their own works which should be to provide a radical reform for the existing economic institutions or to establish new institutions that would make in an effort to act in the service of development. (Mahiou, 2011, p. 2; Ruggie, 1982) The two main aspects of the international law are the equality and the sovereignty which is the camouflaged adaptation of the wide inequality that is spread among the states. Hence the new international economic order comes as a welcome as it brings in with it the scope of legal analysis of the economic factor and the level of development and the assessment of the interstate relations. The new international economic order places individual states in the context of the international changes, considering its capacity and contributions. The old system with a single set of rules is being substituted by the dual system which distinguishes between the rules that are applicable between two developed countries and the sets of rules that are applicable between a developed country and a developing country in an attempt to redress the inequalities between the countries and thus an introduction of compensatory inequality in favor of the countries in the South. The new international economic order challenges the proposition of the abstract legal equality. It brings in face to face the real objective condition revealing that States do not play similar roles in the international society as some of them have a very important presence and weigh determinedly on the course while others have no power to voce out anything. Hence the approach of the new international economic order have been initiated which considers justice and makes an effort to give real material to a development strategy. (Mahiou, 2011, p. 3; Third World Solidarity: The group of 77 in the UN General Assembly, n.d; Davidson and Renninger, 1982 ) The Results achieved by the introduction of the new international economic order The assessment of the policies and work by of the new international economic order yields a mixed result. While some emphasizes on its contribution to the third world others highlights the failure of the strategy which proved to be hazardous to the economic liberalism and was a realm of Western Domination. The main institutional transformation as a result of the new international economic order are the reform of most of the international trade rules like the introduction of the Part IV of the Trade and Development of the GATT and the preservation of the precise preparations in the context of the World Trade Organization with the Doha Round, which is working on to find the solutions to the demand of the third worlds countries by taking into account the inter alia and the involvement of the agriculture in the future international exchange regulations. (Mahiou, 2011, p.4) The changes also included the flexibility in the existing rules and the introduction of the new rules to facilitate financing in the development of the countries and enhancing debt management within the World Bank and the International Monetary Fund. The overtly rigid policies of the international liberal economic system of the international organization like the World Bank and the International Monetary fund were also criticized. There was also a shift in the importance given of the international assistance and co operation mechanisms irrespective of the fact whether its multilateral like United Nations, Development Programme, United Nations Industrial Development Organization, United nations conference on trade and Development, United Nations Commission on International Trade Law, etc, or regional or bilateral and in some instances the establishment of the new institutions including the International Monetary Fund Agricultural Development and the Common Fund for commodities besides the existing commodities agreements. There are some instances in the development of certain international legal regimes like the status of the seabed as a common heritage of human beings, transfer of technology, protection of the environment and also others. There are also instances of the development of the regional ones like the development agreement between the countries of Africa, the Caribbean, the Pacific and Europe and incentives has also been provided for the regional integration of the countries of the South. The bilateral regimes include the assistance in the field of development and the investment protection agreement. (Mahiou, 2011, p.4; Johanson, 1986; Cox, 1979, p. 257) The new international economic order has opened up developing countries to have an opportunity in wining reforms and concessions primarily in the form of the large number of resolutions that had been adopted by the General Assembly till 1980s- the resolutions 3281(XXIX) of December 12,1974 on the Charter of Economic Rights and Duties of States, resolution of 3362(S-VII) of September 16, 1975 on the issues of development and international economic cooperation and the resolution 34/150 of December 17, 1979 on the principles of the new international economic order. However in the 1980s the developing countries of the world did not mange to sustain recognition of the right to development- the General Assembly resolution of 41/128 of December 4, 1986, which could had made way for the new international economic order with its legal foundation that it lacked. They were even not successful in establishing an international system to supervise the transnational corporations’ activities. (Mahiou, 2011, p. 5; Waldeheim, 1984; Holm, 1990) The new international economic order debate is not entirely finished as it still is relevant to some concerns of the United Nations and this initializes attempts to regenerate the new international economic order in other forms by connecting it to the present developments and the controversies that arises from the globalization. With time the reference to the radical vision has disappeared and the Southern countries on more sectoral and concrete concerns. There is a change in the scenario that is being found in the countries of the South with their desire for integration into the international trade flows. The fact that the economic liberalism holds have moved away all mean so the debate on the international economic relation has lost its ideological passion. The new approach is more practical which aims at making corrections on a case by case basis addressing the difficulties of the developing countries that they are facing instead of seeking a global abstract solution for the internal economic inequalities. Finally the present debate on the sustainable development has given rise to the debate of the sustainable development as a combined result of the environment and the development. (Mahiou, 2011, p.5; Lewis, 1977; Bhagwati, 1977) Conclusion The new international economic order does contain some supply side constrains but some significant contribution of it cannot be denied. It should be also admitted that some changes brought about by it did not had any significant impact. However the global contribution of the new international economic order becomes difficult to identify and in any case the States review its contribution in the context of its advantages and disadvantages. Without denying the positive contribution of it, this also cannot be ignored that it has resulted in the divisions and splits which characterizes the Group of 77. The noteworthy differences in their situations that point out the necessity of certain changes have been nicely camouflaged by the apparent unity of the members. References: 1. Rose, K,A, (2010), The International Economic Order in the aftermath of the Great Recession: A Cautious case for optimism, Spring/Summer 2010, Vol.XVI,(2), available at: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=4678d513-b4ec-4b8d-9f72-9a295bced22e%40sessionmgr112&vid=1&hid=127 (accessed on May 7,2011) 2. Mahiou, A., (2011), Declaration on the Establishment of a New international Economic Order, United Nations Audiovisual Library Of International Law, available at: http://untreaty.un.org/cod/avl/pdf/ha/ga_3201/ga_3201_e.pdf (accessed on May 7,2011) 3. 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