Emerging International economic order : a third world perspective

The past two decades have witnessed a rising trend towards greater integration of the global economy following the principles of free trade and laissez-faire. The primary architect of this new world order has been the World Trade Organization (WTO) which has emerged as a supreme decision-making body governing almost all dimensions of economic affairs of a nation today. The WTO initiatives have been supplemented by the economic prescriptions of structural adjustment offered to developing nations by the IMF World Bank continue to reinforce this new world order of globalization and liberalization with greater (and, almost exclusive) reliance on the market mechanism and the private sector.

The main objective of WTO is to extend the definition of trade. Trade is linked to other economic activities and policies (production policy, competition policy, Investment policy, etc.) of a nation on grounds that all these have a bearing on trade due to their impact on resource allocation and comparative advantage. One of the most striking features of the WTO is the way it incorporates trade in services within the framework of free trade. The core WTO philosophy is based on the twin notions of most favoured nation (MFN) and national treatment (NT). The concept of MFN ensures non discriminatory treatment provided by an importing country to all producers seeking to market a particular product, irrespective of the country of origin. The NT seeks to extend domestic treatment to foreign investors. In a nutshell, these two concepts of MFN and NT have significantly reduced the role of national governments in framing their own economic policies, especially with regard to trade and investments.