The World Bank and The World Trade Organizations


The World Bank



Headquarters of the World Bank
Source: Wikimedia Commons

The World Bank was created initially to provide for the reconstruction of Europe after World War II. Many European cities had been bombed and required extensive rebuilding. More recently, it has provided loans to developing countries for projects related to health and education, agriculture, infrastructure such as electricity and roads, and restructuring government. For example, Afghanistan was granted a loan of $40 million to improve the water supply in Kabul and $20 million to improve crop and livestock production in rural areas. The World Bank has also assisted the countries of Eastern Europe to make the transition from communism to free market economies. Since being founded, the World Bank has been involved in over 13,000 projects.


Both the World Bank and the International Monetary Fund are controlled primarily by the United States and the other major developed countries. The percentage of the funds contributed by a country to the fund determines the percentage of votes it is entitled to when deciding on issues of operation. Approximately 16.4% of all money given to the World Bank comes from the United States, which in turn gives them a large block of votes. This may not sound like much. However, because all major decisions require an 85% majority, the United States has an essential veto over any decision made by the World Bank.


Some development projects of the World Bank can be viewed at their website.



The World Trade Organization


The major powers of the world realized that not only did they need institutions to help countries compete in a world-wide market, but the market also needed rules and regulations that benefited all participating nations.

These were set out after World War II in the General Agreement on Tariffs and Trade (GATT). Tariffs are taxes on goods and services coming into the country. Whenever, you order something through the mail from the United States or somewhere else, a sticker from the Canadian Department of Immigration is attached to the package. This tells you what you had to pay for duties or tariffs on that item. The General Agreement on Tariffs and Trade was an agreement among 23 countries in 1947 to treat the products of each of the countries equally. For example, if Canada had a tariff of 25% on automobile parts coming into the country from the United States, it would have the same tariff on automobile parts coming from the United Kingdom or Japan. As well, the countries would not use quotas on imported goods. For example, Canada could not restrict the number of rubber tires coming into the country. It could only put tariffs on them.


Membership in the World Trade Organization (WTO) grew from the 23 original countries that made up the General Agreement on Tariffs and Trade (GATT) in 1947 to 125 nations when the World Trade Organization (WTO) was made an official organization in Geneva, Switzerland in 1995. The World Trade Organization was created through a series of negotiations held in Uruguay from 1986 to 1994. Its primary goal is to assist producers of goods and services, exporters, and importers conduct business by providing a forum for trade talks, solving trade disputes, monitoring national trade policies, and administering technical assistance and training to developing countries. Canada signed as an original member in 1995. Membership has grown to 164 nations as of July 2016.


Many people disagree with the activities of the World Trade Organization. While the World Trade Organization establishes "rules" for international trade, critics believe these rules favour wealthy and powerful nations and organizations. For example, many rich nations do not allow certain imports from poor nations, but they insist that their own goods be exported into these same nations. They do not support safe labour practices or fair trade. For one thing, jobs have moved from industrialized countries such as Canada and the United States to developing countries such as Mexico and China. This means a loss of jobs for people in developed countries. Sometimes job losses in developing nations occur when large corporations move production from one less-developed country to another. Labour laws are lax in many of these countries where people, including children, must work long hours in unsafe conditions for low wages. As well, environmental protection is weak in these poor countries where poor and/or corrupt governments, desperate to earn income, do not monitor either pollution or destruction of the environment. As well, some feel strongly that the World Trade Organization (WTO) is so powerful it can force sovereign governments to change their own laws to support the kind of "free trade" the World Trade Organization believes in.