Towards a Better Governance of Global Trade and Investments : The Historical Relevance of the International Trade Organization and Its Lessons for the Contemporary Trade and Investment Regulation

The importance of global regulation in the field of trade and investments is stronger than ever. Globalization has created a deep global integration, where capital is highly mobile, crises are more common and inequality is at unprecedented levels. Currently, the World Trade Organization (WTO) is trying to reform its operations and looking for a way forward during a period of an intense debate between the neoliberal ideology and feasible alternatives. This thesis investigates the creation and provisions of the International Trade Organization (ITO) and compares it to the WTO. It seeks to show how the ITO can provide fresh ideas and solutions to the contemporary challenges. This thesis utilizes comparative analysis to examine the investment regulation in the two organizations. More generally, this thesis is influenced by the critical realist approach to social sciences. The primary sources for the analysis are the Havana Charter, the Agreement on Trade-Related Investment Measures (TRIMs) and the General Agreement on Trade in Services (GATS). The comparative analysis indicates that there are major differences in the treatment of investments between the ITO and the WTO. First, the TRIMs and GATS Agreements tend to support the WTO’s main objective of liberalization, which stems directly from the neoclassical theory. In contrast, the Havana Charter appears to be a more heterodox from the perspective of economic theory. In addition, the findings suggest that the Havana Charter is more development-friendly, has more balanced regulation between investors and host countries, and regulates also private actors, such as multinational corporations. From the end of the 20th century until this day, liberalization has reigned in the trade and investment domain. It is argued that in the future, more emphasis should be put on a wide variety of issues to support sustainable and inclusive development. Furthermore, it is suggested that the ITO points towards global Keynesianism, which could serve as an adequate path towards a better governance of global trade and investments in the 21st century