RELATIONSHIP BETWEEN THE WORLD TRADE ORGANIZATION
(WTO) INTERNATIONAL MONETARY FUND (IMF) AND THE
WORLD BANK AND ITS IMPACT ON THE ECONOMY OF
DEVELOPING COUNTRIES
Introduction
The development of the world, especially in the field of trade towards a free market
began in 1994, where the World Trade Organization (WTO) was formed.[2] The WTO was
established as a result of the Uruguay Round negotiations held within the framework of the
General Agreement on Tariff and Trade (GATT), which began in September 1986 in Punta
del Este, Uruguay and ended in April 1994 in Marrakesh, Morocco.[3] The WTO Agreement
and all its annexes took effect on January 1, 1995.[4] The WTO is an organization formed to
be a forum for world countries, especially WTO member countries, to consult and agree on
international trade rules, which are more open, and fairer.[5] The formation of the WTO
began with the formation of the General Agreement on Trade and Tariffs (GATT) 1947,
which is an agreement that agrees on the basic rules of trade.[6]
GATT 1947 was motivated by the end of the World War II, where at that time most countries
in continental Europe and America, experienced economic difficulties, which resulted in
many of these countries closing down, to protect the domestic economy.[7] The economic
protection implemented by applying import duty tariffs to products from other countries with
very high values, this is an effort to protect the domestic industry[8].
United States in 1994 by signing and ratifying the agreement establishing the World
Trade Organization (WTO) became a member of the WTO, and is subject to and complies
with the rules of the WTO. All WTO agreements are considered a single undertaking, which
means that all WTO member countries sign the WTO agreements, as a single package.[10]
The WTO is the result of the Bretton Wood Conference initiated by the United States.[The
Bretton Wood Conference produced the basic concept of economic globalization that is
currently occurring.[12] The world economic system resulting from the Bretton Wood
Conference is in principle a controlled capitalist economic system through state intervention
developed by Maynard Keynes.[13] The period 1947 - 1980 was the golden age of this
capitalist system, where state control provided appropriate restrictions and still recognized the
sovereignty of countries. In 1980, with the development of international trade, the concept of
free trade began to touch developing and underdeveloped countries. The influence of free
trade was the influence of two international economic organizations, namely the International
Monetary Fund (IMF) and the World Bank.[14] The influence entered developing and
underdeveloped countries through the insistence of the IMF, which intervened in the
macroeconomic policies of developing and underdeveloped countries. The background of the
IMF and World Bank's interference in determining the macroeconomic policies of developing
and underdeveloped countries is the result of the economic crisis that occurred in the 1980s to
the end of the 90s, where the country's macroeconomic policies were influenced by the IMF
and World Bank.
The IMF and World Bank as two international monetary organizations at that time
became two pillars of economic assistance for developing countries, but the monetary
assistance provided by the two international monetary organizations was given under certain
conditions, which were mainly known as the Structural Adjustment and Stabilization Program
(SAP).[16] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with the agreement in the General Agreement on Tariffs and Trade
(GATT) 1994 / WTO.[17]
Subject matter
Starting from the description above, it can be formulated several main problems that will
be researched and revealed in this study are as follows:
What is the relationship between the IMF, World Bank and GATT?
How has the Bretton Wood system affected United States?
How should United States apply the Bretton Wood system to its advantage?
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
Theoretical Foundation
In this study, as a theoretical basis in the analysis used to determine the correlation
between the three international organizations resulting from the Bretton Wood agreement and
its influence on United States, natural law theory and utilitarian theory will be used.
According to Aquinas, law can contain injustice when it contradicts the idea of human
welfare. Legal injustice can occur for three reasons. First, because the ruler imposes laws that
do not bring about general welfare, but only because of the ruler's own desires. Second,
because lawmakers exceed their authority. Third, because the law is imposed on the people,
even though the reason is for the public welfare. Aquinas called this the violence of the law.
The relationship between natural law and positive law is usually formulated in the
form of rights."[18] A right is something that is given to a person others on the basis of the
principle of equality. Something can become a person's right in two ways. First, something
can become a person's right through their nature. This right is called a natural right. Natural
rights as regulated by natural law originate from God. Second, something can become a
person's right through an agreement or consent with another person, either an agreement
between individuals or a public agreement. This second right is called a positive right and is
regulated in positive law. Through Aquinas' teachings of natural law, it is not difficult to
understand the aspirations that call for the recognition of collective rights to cultural heritage.
Furthermore, Fuller argues that law must have certain characteristics in order to be
called 'law'. The most important characteristic is "internal morality".[19] The presence of
morality in law is symbolized by justice.[20] Justice according to Aristotle can be understood
in two senses, namely a general sense and a specific sense. Justice in the general sense is
defined as complete virtue[21]. John Rawls gives almost the same meaning that justice is the
first virtue of social institutions, as truth is of systems of thought."[22]
Particular justice according to Aristotle includes the notions of distributive justice and
corrective justice. Distributive justice refers to the principle that everyone in the community
should get an equal share with respect to assets or anything that is divisible among the
members of the community."[23] While distributive justice always involves three parties,
namely two parties who demand justice from each other and a third party (central authority)
who is in charge of providing justice."[24]
The justice referred to above (distributive and corrective) is substantive above
(distributive and corrective) are all substantive in nature. That is, all these forms of justice
emphasize the result. This is different from fairness, which emphasizes the question of how
justice can be achieved.[25] Fairness is more procedural justice. Talking about fairness is
talking about how the process to achieve justice is done fairly. The relationship between fair
procedures and substantive justice is described by John Rawls in the phrase "justice as
fairness". If the procedure for applying justice is fair, then the outcome is fair[26].
In the context of this research, the struggle of developing countries to protect their
economic interests is a struggle for justice in terms of obtaining protection both on a national
and international scale.
Injustice caused by the application of the principle of equal treatment (non-
discrimination) demanded by developed countries through the WTO must be corrected based
on the principle of rectificatory justice or corrective justice. In this case, the Government's
initiative to seek the protection of the economic interests of the community is one form of
rebalancing the unfair (unjust) situation carried out by developed countries.
Furthermore, utilitarian theory is also used to analyze that in essence the law is
formed to achieve the happiness of the majority of citizens. The theory of utilitarianism
pioneered by Bentham is about law which states that the ultimate end of legislation is the
greatest happiness of the greatest number."[27]
Referring to Bentham's theory, the law must be created based on a sense of
community justice for the happiness of the citizens of the community concerned. An objective
rational measure of expediency is if the law in question is economically able to create welfare
for the majority of its citizens.
Based on the utilitarian principle, natural law is created to achieve happiness for the
greatest number of citizens."[28] This is where Bentham's utilitarian theory meets Aquinas'
natural law theory of goodness and happiness[29] as the ultimate goal of all human action.
Laws must be created for the happiness of the people or the happiness of the greatest number
of people.
Research Methodology
Legal research is basically a problem-solving activity. The preparation of this thesis
uses a normative juridical research method. The normative juridical method focuses on the
study of legal norms contained in legislation, international conventions, treaties, court
decisions and legal norms that live in society. so that this research is prescriptive, namely
trying to find a way out to overcome existing problems.
The approach used in this research is a qualitative approach which aims to understand
the background of a legal concept, especially the concept of international economic law,
especially related to the Bretton Wood economic system. While the data used in this research
is secondary data, namely laws and regulations, books, and research results as well as
interviews.
Analysis
The phenomenon of the world economy today makes countries, including United
States, required to follow the trend of economic globalization, which leads to globalization in
the sense of compression of the world in the economic field. Economic globalization which is
also increasingly developed by the principle of trade liberalization or other free trade, has
brought influence on the laws of every country involved in economic globalization and free
trade. Because the flow of economic globalization and free trade is difficult to resist and must
be followed. Because economic globalization and free trade are developed through
international negotiations and agreements, especially as agreed at the Bretton Wood
conference.
The Bretton Woods system was born out of the need for a reliable monetary system to
cope with the aftermath of World War II. Based on the experience of World War I, the
aftermath of the war was a very tough time for the world economy. The revival of the
economies of the countries involved in the war, such as increased production of foodstuffs
and industry, would make global production increase rapidly, far exceeding needs.
It is this situation that gives birth to the alternating occurrence of protection and
devaluation (competitive devaluation). A country's policy ultimately only wants to protect its
own country and does not care about the impact on the economies of other countries. The
right term to describe it is Beggar thy neighbor policy. Based on this experience, before
World War II ended, 44 countries gathered in Bretton Woods Village, New Hampshire,
United States (US), precisely on June 1-22, 1944. The long meeting, which was attended by,
among others, John Maynard Keynes from the UK and Dexter White from the US, ended up
being took the decision to establish the Bretton Woods System, of which the establishment of
the International Monetary Fund (IMF) was one of the pillars.
The new monetary system was based on a fixed exchange rate system against the US
dollar, while the US dollar was linked to gold, with each 1 ounce of gold (approximately 30
grams) priced at USD35. In this way, the exchange rate between currencies other than the US
dollar also became fixed. The conference also gave birth to the World Bank in the form of the
International Bank for Reconstruction and Development (IBRD) and the world trade
organization (originally designed in the form of the International Trade Organization), which
later emerged in the form of the General Agreement in Tariffs and Trades (GATT) in 1947. It
was not until 1995 that the World Trade Organization (WTO) was formed. Such an exchange
rate system is based on the premise that each country must maintain its balance of payments.
If there is an imbalance in the balance of payments (especially export-import), it is necessary
to take corrective measures, both temporary (for example with IMF assistance) and more
structural, namely through devaluation or revaluation.This system ultimately does bring better
stability in the world economy, although here and there there there are exchange rate
adjustments and structural adjustments to the economies of various countries.
The implications of economic globalization for law are unavoidable. Because the
globalization of law follows the globalization of the economy, in the sense that the substance
of various laws and agreements spreads across national boundaries (cross-border)."[31] It is
precisely the view of Lawrence M. Friedman, who said that the law is not autonomous, but on
the contrary the law is open at all times to external influences."[32] It can be understood that
economic globalization and free trade have caused enormous consequences in the field of law.
Countries in the world involved with economic globalization and free trade, both developed
and developing countries and even underdeveloped countries must standardize the law in their
economic activities.
Since the late 1980s, a "new" development strategy has emerged, reflected in the
development policy programs of the IMF (International Monetary Fund) and the World Bank.
The "new" development strategy clearly shows the Renaissance of the liberal mindset in the
economic theory of development. The "new" development strategy is based primarily on a
demand to reduce underdevelopment, read poverty. This means that a change in the inefficient
structure is needed. This was done by implementing structural adjustment policies (SAPs).
SAPs are associated with IMF and World Bank loans, especially since the debt crisis of the
early 1980s (e.g. Argentina, Mexico, Brazil, Ghana, Nigeria), but also in Eastern Europe and
during the Asian financial crisis since 1997 (Thailand, United States, South Korea). SAPs
apply conditionality requirements to short-term hard currency loans (IMF) or longer-term
loans (World Bank). The same mix of conditionalities, including careful and detailed scrutiny
of all government policies, will be reinforced through agreements, 'letters of intent' and the
phasing in of loan funds. These requirements typically include:
Removal of price subsidies and price controls
Tariff cuts and other trade controls
Immediate devaluation of the currency, and release of foreign exchange controls.
Industrial upgrading for export
High interest rates, to prevent inflation and attract foreign capital
Reduction of government services and replacement with 'private provision' and public-
private partnerships on some infrastructure.
Privatization of profitable state-owned enterprises.
The main link between the WTO and the IMF and World Bank is the concept of SAP
developed by the IMF. The WTO as the World Trade Organization is an international
organization that resulted from the Uruguay Round of negotiations, held within the framework
of the General Agreement on Tariffs and Trade (GATT), which began in September 1986 in
Punta del Este, Uruguay and ended on April 15, 1994 in Marrakesh, Morocco. The WTO
began operating as an international organization on January 1, 1995. The WTO is referred to
as a vital support for strengthening world economic cooperation and is also referred to as one
of the most important international organizations in the field of international economics, in
addition to other international organizations. This can be observed from the opinion of Peter
D. Sutherland, former Director-General of GATT who delivered at the World Economic
Forum,
The main objective of the WTO as an international trade organization is to
liberalize international trade and make free trade the cornerstone of international trade to
achieve economic growth, development and development. The substance of the arrangements
handled by the WTO has now expanded to include new issues that were not previously
included in the GATT, such as the issue of protection of Intellectual Property Rights (IPR),
policy issues in the field of investment that have an impact on trade, and the issue of trade in
services General Agreements on Trade in Services (GATS).
The agreements contained in trade agreements under the WTO are primarily to reduce
tariff and non-tariff barriers.[36] These barriers include the imposition of import duties and
import banning measures or quantitative restrictions on imports through selective quota
arrangements.[37] Since the establishment of the GATT in 1947, nine rounds of trade
negotiations have been held.[38] These rounds of negotiations were primarily aimed at
negotiating tariff reductions on imported goods.[39] The result achieved through these
negotiations was a regular reduction in tariff rates on industrial products to around 6.3% by
the end of the 1980s.[40] Developments arising in the post-1980s period prompted the
discussion of non-tariff barriers in goods, services and intellectual property rights."[41]
To encourage the participation of developing countries in WTO agreements, the
international trade agreements under this organization contain exceptions granted to
developing and underdeveloped countries. These exceptions are mentioned in all agreed
agreements, known as the Special and Differential Treatment Clause (S&D).[42] The
implementation of this special treatment provision for developing and underdeveloped
countries is often an obstacle in trade negotiations because the application of S&D is strongly
opposed by developed countries because it is considered that this differential treatment will
disrupt international trade more than benefit it.[43]
Analysis
The influence of the WTO into developing and underdeveloped countries is done
through the insistence of the IMF, which intervenes in the macroeconomic policies of
developing and underdeveloped countries. The background of the IMF and World Bank's
interference in determining the macroeconomic policies of developing and underdeveloped
countries is the result of the economic crisis that occurred in the 1980s to the late 90s, where
developing and underdeveloped countries at that time experienced a foreign forest crisis.[44]
The IMF and World Bank as two international monetary organizations at that time became the
two pillars of economic assistance for developing countries, but the monetary assistance
provided by the two international monetary organizations was given under certain conditions,
which were mainly known as the Structural Adjustment and Stabilization Program (SAP).
[45] SAP is essentially an insistence on implementing market openness in developing
countries in accordance with agreements in the General Agreement on Tariffs and Trade
(GATT) 1994/WTO. SAP is primarily the starting point for the relationship between the
WTO and the two financial institutions resulting from the Bretton Wood system because
ultimately it is the WTO that determines the application of SAP.
The role of the GATT in international trade since the establishment of the WTO has
been much more empowering for the WTO to control the economic policies of member
countries. Within the WTO, international trade agreements not only regulate the movement of
goods but also the services sector, intellectual property rights, and investment."[46] Notably,
the WTO also agreed on a dispute settlement system in the Dispute Settlement Understanding
(DSU), which gives member countries the legal right to challenge the trade policies of other
countries in the event that these policies cause harm."[47]
WTO member countries, based on strict international trade policies, may no longer
be able to freely take protective international trade policies for their domestic industries such
as the provision of subsidies or the provision of national content of goods (local content)."[48]
It can be concluded in this case that the space for member countries to provide protection or in
relation to developing countries to develop their national industries is limited because the
sovereignty of the state to determine the direction of its policies has been subordinated under
the WTO."[49]
Based on this fact, it provides an understanding of the free trade system implemented
by the WTO, which provides more obstacles to member countries than providing benefits for
the development of their countries. One example that can be taken is the reality that happened
to Vietnam, Argentina and Haiti.[50] Vietnam, which at the beginning of the trade era in
2000, was not yet a participant of the WTO, but the economic development carried out since
1980, is now a member country. On the contrary, Argentina and Haiti, which are members of
the WTO, from the 1990s, did not increase their economic growth and even tended to stop,
poverty increased, foreign debt increased, which eventually led to a major political dispute
between 2000-2003."[52]
The power of the WTO, not only causes harm to developing countries, with the
implementation of free markets by the WTO, many companies in developed countries move
industrial processes to developing countries that are considered to have low cost levels,
resulting in a decrease in employment in developed industrial countries, which in the long run
creates high unemployment rates and declining welfare levels[53].
The overall agreement at the WTO ultimately only benefits a handful of
multinational companies with large capital, the main objective of the WTO to develop
equitable economic development is currently sidelined by the development of a free market
for multinational companies which tend to be companies from developed country groups such
as the United States, Japan or countries in continental Europe.[54] The sidelining of the main
objective is due to the formation of trade agreements such as Trade Related Investment
Measures (TRIMs) and Trade Related Aspects of Intellectual Property Rights (TRIPs).[55]
Under TRIPs, multinational companies can now not only be patent holders of inventions, but
it is now also possible for multinational companies to hold intellectual rights to products that
are not categorized as inventions such as seeds or superior varieties of plants which are very
important for developing countries, the majority of which are agricultural countries.[56] The
trade policy in TRIPs mentioned above will make it difficult developing countries to improve
their economies that rely heavily on the agricultural sector, as access to seeds and improved
varieties is limited, given that multinational companies will sell their products as commodities
at market prices.
Based on this fact, environmental activists state that this is a violation of the rights of
farmers, considering that the plant seeds that have been patented by multinational companies
are classified as genetic commons. Genetic commons are plant seeds that have actually been
developed over a long period of time by farmers and developed traditionally, with a
socialization process that is also traditional."[57] In addition to TRIPS, the WTO agreement
that also does not accommodate the interests of developing countries is TRIMs. Prior to the
implementation of TRIMs, the principle of international investment was based on Article 7 of
the Charter of Economic Rights and Duties of States (CERD) which states that the state has
sovereignty and responsibility to develop economic, social and cultural improvements, the
implementation of which is carried out with the freedom to establish policies that can support
its development goals.[58] CERD in Article 2 paragraph (2) letter b, also determines that a
sovereign state has the right to regulate and supervise the business activities of multinational
companies in its country to protect its economic and social sectors. The two basic principles
established by CERD essentially determine the right of the state to form investment policies
that are more aimed at national development.[59] The application of TRIMs has violated all
policies that can be carried out by the state to carry out national economic development. One
of the prohibited activities is the provision on discrimination of national and foreign products.
Most national industries in developing countries are classified as infant industries, which in
essence are infant industries are still in the development stage with low production levels.
Unfair competition in this case is created due to equal treatment between infant industries and
multinational companies with high levels of capital and production. Through CERD,
developing countries should be able to develop these small industries, through subsidies or
quota restrictions, but with the implementation of TRIMs, this cannot be done.
Another agreement that is also an obstacle to the national development of developing
countries is the agreement in agriculture, which provides exceptions to the applicability of the
rules in the Agreement on Subsidies and Countervailing Measures. It was mentioned above
that developing countries are predominantly countries that excel with agricultural products,
but through agricultural agreements, these activities are hampered, which at this time
developed industrial countries still use very high subsidies to protect the agricultural sector in
their countries.
The GATT 1994 does not specifically regulate the impact of free markets on the
environment or restrictions on trade actions that have a negative impact on the environment.
Currently, many member countries use environmental issues as one of the reasons for
implementing protectionist policies. One of them is what happened in the dispute settlement
through the DSB over the US Dispute. Shrimp is based on the United States banning the
import of shrimp from WTO member countries under Section 609 of US Public Law 101-
162[60], which are caught in a manner that kills turtles.
The dispute settlement was filed by India, Pakistan, Malaysia and Thailand as shrimp
exporters to the United States[61]. The argument of the four countries was that the US shrimp
import ban was a violation of Article XI, GATT 1994 on quantitative restrictions. When
looking at the state of shrimp trade in the United States at the time, the four applicant
countries controlled most of the 85 percent of the US shrimp market.[62] This also pressured
the US shrimp industry to sell cheap shrimp and shrimp production.
The loss of this market will have a huge impact on the economies of the four applicant
countries, especially on their national shrimp industries. Ecuador, which is also a shrimp
importing country to the United States, did not submit this dispute settlement, because the loss
suffered by Ecuador is less than 10 percent of the entire Ecuadorian shrimp market, which has
little effect on Ecuador's economy.[63] Comparing the situation of the four applicant
countries with the situation of Ecuador, it can be seen that economic loss is the main factor in
the submission of dispute settlement in the USA - Shrimp case.
Based on the above cases, the request for dispute settlement is always based on a
WTO agreement, but the submission itself is based on circumstances that are detrimental or
could be detrimental to the country filing the case, if the infringing action is continued.
Conclusion
The WTO is an international organization that is the bearer of the obligations
contained in the SAP concept of the IMF. The reason for the establishment of SAP is to
restore price signals to the market and create favorable conditions for foreign private
investment and expand trade - these things are specified in the framework of the WTO. The
IMF also reasoned that the SAP concept was necessary for stabilization and restoring the
earning capacity of foreign currencies. The World Bank also reasoned that SAP embodies
good policy and is necessary for the stabilization of foreign exchange economic growth,
development and poverty alleviation, and most other social goals.
The noble value that is the basis for the existence of SAP today in its development is
enshrined in agreements within the WTO forum, rather than providing restrictions on state
sovereignty to implement policies that can increase economic development in the country.
The idealism of the WTO which tends to impose free markets in developing countries and
equal treatment with industrialized countries has created further gaps. The principle of equal
treatment prescribed by the WTO, which is imposed on most developing countries through
loan conditions through the IMF and World Bank, has had negative consequences. Unfair
competition under the WTO's free market policies can arise between developing and
industrialized countries, or between national and multinational companies. Equal treatment in
trade is applied to countries or industries with very small capital, low levels of technology and
very small production levels with developed industrial countries with multinational
companies that have very high levels of production, capital and technology. This equality of
treatment in the WTO will kill the economies of developing countries rather than increase the
level of economic development.
