3.4.1.3 Global Economic Regulation
Global economic regulation is much less robust than national frameworks of rules, or those which are applied in formal political groupings.
There are some global regulatory bodies:
● The World Trade Organisation (WTO) regulates international trade, to the extent that it has been able to reach agreement with all the countries involved.
● The International Monetary Fund (IMF) exerts financial discipline over the many countries that it has lent money to.
● Many countries signed up to the UN Framework Convention on Climate Change (UNFCCC), but these agreements are non-binding. There is political pressure to comply, though (6.7.5.4).
● Representatives of the world’s biggest economies, the G7 and the G20, make non-binding agreements with each other which also affect the rest of the world. These are largely unenforceable, although there can be considerable political pressure on western-aligned countries to comply.
This leaves many gaps in global economic regulation:
● Multinational companies face multiple jurisdictions. For example, Microsoft was subject to American antitrust legislation but was also prosecuted for restrictive practices in Europe (case IP/04/382) – illustrating the difficulty of a global company having to comply with different countries’ requirements and repeatedly being placed in jeopardy.
● Transnational fraud has become an increasing problem, particularly via the Internet. The practical difficulties of extradition mean that many criminals are able to commit fraud in other countries with de facto immunity from prosecution – though there are exceptions: the so-called “NatWest Three” case was of three British citizens, working for a British company, who were eventually successfully prosecuted in an American court for fraud. They had to be extradited to face the charges, but the process was prolonged and expensive. Smaller crimes often go unpunished.
● The global financial crisis of 2007-8 gave an impetus to collective financial regulation, but progress is slow for political reasons: negotiations are needed, to harmonise the rules, as described later (3.5.5).
As described later, politicians can easily drum up nationalist sentiment against the concept of complying with shared regulation (6.6.4.2). It is perhaps harder to try to explain to people the benefits of international cooperation. And aggressive nationalism is an increasing problem (6.6.4.3).
This page is intended to form part of Edition 4 of the Patterns of Power series of books. An archived copy of it is held at https://www.patternsofpower.org/edition04/3413.htm.