The General Agreement on Tariffs and Trade (GATT) was established as a provisional agreement to reduce trade barriers through periodic 'rounds' of negotiations.
In 1995, GATT was succeeded by the World Trade Organization (WTO), a permanent body with a more robust legal framework and a formal dispute settlement mechanism to enforce trade rules.
The system is built on the Most-Favored-Nation (MFN) principle, which requires that any trade concession granted to one member must be extended to all other members.
| Feature | IMF | World Bank |
|---|---|---|
| Primary Focus | Short-term financial stability | Long-term economic development |
| Core Activity | Managing exchange rates/crises | Funding infrastructure/projects |
| Funding Source | Member quotas | International bond markets |
| Feature | UN Security Council | UN General Assembly |
| --- | --- | --- |
| Authority | Binding resolutions/Sanctions | Non-binding recommendations |
| Membership | 15 members (5 permanent) | All 193+ member states |
| Voting | Veto power for the 'P5' | One state, one vote |
Identify the 'P5': Always remember the five permanent members of the Security Council (USA, UK, France, Russia, China) as they are central to questions about international power dynamics.
Distinguish Loan Types: If a question mentions 'balance of payments' or 'currency stability,' the answer is almost always the IMF. If it mentions 'infrastructure' or 'poverty reduction,' it is the World Bank.
Understand Veto Power: A common exam trap is suggesting the General Assembly can override a Security Council veto; in reality, the Security Council holds the ultimate authority on enforcement.
Chronology Matters: Note that GATT was an agreement, while the WTO is an organization. The transition in 1995 represents a significant hardening of international trade law.
UN as World Government: Students often mistakenly view the UN as a global government with supreme authority; however, it is a voluntary association of sovereign states that often lacks enforcement power without consensus.
IMF vs. World Bank Roles: A frequent error is confusing the two; remember that the IMF is the 'firefighter' for immediate financial fires, while the World Bank is the 'architect' for long-term growth.
Equality in Voting: While the UN General Assembly is egalitarian (one vote per nation), the Bretton Woods institutions are plutocratic (voting power based on wealth), which is a frequent point of political tension.