New International Economic Order and Monetary Law | Law Optional Notes for UPSC PDF Download

A Brief Overview on International Economic Order

• The international economic order encompasses a set of established rules and procedures governing the exchange of goods, services, and capital across international borders.
• During the 1970s, the New International Economic Order (NIEO) emerged as a series of proposals by some developing nations, presented through the United Nations Conference on Trade and Development. The NIEO aimed to advance the interests of these nations by improving trade terms, increasing development aid, reducing tariffs in developed countries, and reshaping the international economic system to favor the Third World countries over the Bretton Woods system, which primarily benefited the United States.
• The core principles of the NIEO model were built on ideas of fairness, sovereign equality among nations, mutual interests, and cooperation, regardless of their social and economic systems. The goal was to rectify imbalances and address existing injustices, ultimately bridging the gap between industrialized and developing nations.
• The objective of the NIEO was to enhance the global economy by implementing cohesive policies and performance goals for the entire international community.
• Originating from the aftermath of decolonization following World War II, the NIEO concept evolved due to disruptions in the global economic structure caused by the war and the collapse of the international monetary system. These factors exacerbated the disparity between industrialized and impoverished countries.
• The Non-Aligned Movement (NAM), consisting of 120 nations that were not aligned with either the Western or Eastern Blocs during the Cold War, played a significant role in shaping the NIEO concept. They argued that the existing international economic system perpetuated inequality and did not consider the interests of newly independent nations.
• In 1973, the NAM's chairman requested a Special Session of the UN General Assembly to address issues related to raw materials and economic development. Subsequently, in September 1973, the UN General Assembly adopted the 'Programme of Action for the Establishment of a New International Economic Order.' On December 12, 1974, the United Nations General Assembly also adopted the 'Charter of Economic Rights and Duties of States' to further support these principles.
• Despite ongoing discussions, the NIEO has not been fully realized. However, in 2018, the UN General Assembly passed a resolution titled 'Towards a New International Economic Order,' reaffirming the importance of working towards its establishment.

Founding Principles

The New International Economic Order (NIEO) was established in alignment with the principles outlined in the United Nations Charter, aiming to advance economic and social progress for all.
The NIEO is guided by the following key principles:

• Equal Sovereignty and Self-Determination: All states are equal and have the right to self-determination, and the acquisition of territories through force is prohibited. States' territorial integrity must be respected, and there should be no interference in the internal affairs of other nations.
• Global Cooperation for Equity: The international community, characterized by fairness, should engage in extensive cooperation to reduce global inequalities and promote prosperity worldwide.
• Freedom of Economic and Social Choice: Every country has the liberty to choose its preferred economic and social system for development without facing discrimination.
• Assistance in Times of Crisis: Special measures should be taken to aid developing countries affected by economic crises and natural disasters.
• Sovereignty over Economic Activity: Each state has full and enduring control over its economic activities and natural resources.
• Reparation for Exploitation: Governments, territories, and peoples under foreign occupation, colonization, or apartheid have the right to recover and receive compensation for the exploitation and depletion of their natural resources and other assets.
• Enhanced Cooperation Among Developing Nations: Developing countries should foster stronger economic, trade, financial, and technological cooperation, with a focus on preferential arrangements, both individually and collectively.
• Comprehensive Support from the Global Community: The entire international community should provide active assistance to developing nations without imposing political or military restrictions.
• Access to Technology: Underdeveloped countries should have access to modern science and technology, and technology transfer should be encouraged.
• Development-Oriented Monetary System: The reformed international monetary system should prioritize the development of developing countries and facilitate the proper allocation of real resources to them.

In essence, the NIEO seeks to establish a more equitable and cooperative global economic order that respects the sovereignty and development aspirations of all nations while addressing historical injustices and disparities.

Monetary Law

• The New International Economic Order (NIEO) is rooted in principles of public international law, emphasizing the equality of sovereign states, interdependence, and cooperation among all nations, regardless of their varying levels of economic development and social structures.
• It proposed a transformation of the existing international monetary system and legal framework through the creation of new international agreements for commodities and the stabilization of commodity prices via a shared global fund.
• Additionally, the NIEO aimed to enhance global trade by improving trade terms favorable to developing countries. It recommended integrating less affluent nations into regional trade blocs, where increased free trade could potentially reduce taxes imposed by wealthier nations and other trade barriers.
• The NIEO emphasized the need for reforms in international trade regulations, particularly those governing raw materials, food, commodity agreements, transportation, and insurance, which included restructuring aspects of the Bretton Woods system.
• Overall, the NIEO advocated for transferring authority to emerging nations while accelerating their economic growth and increasing their market participation.

Conclusion

In the aftermath of World War II, developing countries pushed for the establishment of the New International Economic Order as a means to attain both political and economic independence from colonial powers. Its primary objectives were to tackle key challenges faced by developing nations, such as trade imbalances, debt crises, and a shortage of foreign currency. While it has not been fully realized, the necessity for a revamped economic system is still widely recognized in the global economy.