THE ISSUES OF SCOPE AND LEGAL STATUS IN WTO – IMF CONSULTATIONS

Abstract

In designing the international economic governance system after the Second World War, trade and finance, due to the close connection between them, were addressed as parts of a whole. A predictable and stable international monetary system was recognized as prerequisite for healthy and sustainable trade. However, these two issues were regulated under different institutional structures, by envisaging close cooperation and coordination. The International Monetary Fund (IMF), designed to be responsible for international finance and monetary issues, was established in 1944. The International Trade Organization (ITO) was designed to address international trade, while the General Agreement on Tariffs and Trade (GATT), with a limited scope, was temporarily put into implementation in January 1, 1948 to provide rapid tariff reductions until the ratification of ITO Charter. The ITO became still-born as it was not approved by national parliaments, especially the USA, and international trade continued to be regulated by the GATT. The GATT, with its unique organizational structure that gradually developed, continued its existence until the establishment of the World Trade Organization (WTO) in 1995 and hosted international trade negotiations. WTO, with more advanced legal and institutional structure, took over the functions of the GATT. Formal consultation procedures have constituted an important part of the cooperation between the GATT/WTO and the IMF in the context of the management of international trade and monetary/financial system. These procedures differ from traditional cooperation activities between international organizations and have a special character. It is regulated in a binding language as an obligation for the relevant WTO bodies to apply for consultations with the IMF on certain issues and to comply with the inputs received from the IMF. There are some points open to interpretation regarding the scope of the consultations and the binding and functional status of IMF inputs in the WTO. This study discusses the issues of scope and legal status.