House of Commons Issue No. 16 Minutes of Proceedings and Evidence of the Standing Committee on Foreign and International Trade
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From Bretton Woods to Halifax and Beyond:
Towards a 21st Summit for the 21st Century Challenge

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Several additional matters deserve to be raised which relate to the individual mandates of the institutions but which also involve the functioning of the Bretton Woods system as a whole and its place within the larger firmament of international organizations. Beginning with the key relationship between the IMF and World Bank "twins", described to us as a "street of active trespass" by IMF veteran Jacques Polak, it is clear that the blurring of the former's task of short-term stabilization and the latter's long-term development perspective is causing convergence headaches. In our meetings at the Bank, Senior Vice-President and Legal Counsel Ibrahim Shihata agreed, that although this debate was not new, overlap was an increasingly serious problem. The very fact of there being more formal operational protocols and agreements needed between the Bank and the Fund indicates that all is not sweetness and light. Departing Bank President Lewis Preston has urged that competition between the two institutions be reduced. Another problem that has been raised is the potential conundrum of countries on the receiving end if there is conflicting advice in the conditionalities demanded by each institution when their interventions intersect.

In terms of the relationship of the IFIs to the new World Trade Organization (WTO), while the Committee was not able to examine this issue in detail, we believe it will become of growing importance. It is necessary to complete the design of a Bretton Woods system that achieves coherence, and that efficiently finances the resource transfers needed in particular by non-OECD countries to take advantage of the benefits from liberalized trade expansion, while at the same time avoiding the duplication that has arisen from the spreading territorial ambitions and frictions of a Bank-Fund relationship that needs to be untangled. Gerald Helleiner observed that the WTO, which is not yet a Bretton Woods institution and which has quite different governance practices, "also has considerable overlap in its functions, particularly as it relates to the handling, regulation and supervision of financial services". [16:16] Indeed, one of the WTO's first big tests will be whether agreement can be reached on the opening up of banking and insurance markets. Moreover, the IMF and World Bank are also specialized agencies of the United Nations, even if this relationship has been tenuous and often strained. The government's foreign policy statement indicated that in reviewing evolving IFI roles and interrelationships with UN agencies - "Elimination of duplication and competing mandates will also be a major Canadian objective". As John Kirton testified:

. . . the world today does not suffer from a shortage of international institutions. ( . . .) we are facing a major problem with overlapping activities, compounded by institutional rivalries amongst these different generations of institutions. [16:10]

In light of the above, the Committee recommends that the G-7 Task Force, in scrutinizing the mandates of the existing Bretton Woods bodies, do so in the context of their relationship to the WTO and the United Nations system, with the aim of achieving a desirable coherence among the objectives of these institutions, and of supporting a broad global distribution of the benefits from an open trading and financial system, while avoiding further problems of institutional competition and duplication.

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