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131. The Final Few: Completing the Universal Membership of the IMF

Author:
James M. Boughton
Publication Date:
02-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The International Monetary Fund (IMF) has 188 member countries. The United Nations has 193. The difference is not economically or politically trivial. Although none of the members missing from the IMF is a large country, two of the five are potentially important in their regions: Cuba and North Korea. What would it take to complete the process to have both countries included as IMF member countries? What are the obstacles to becoming members, and how can they be overcome? For three years, 1997 to 2000, tentative moves toward membership for North Korea were encouraged by South Korea and were tolerated by most Western powers. The détente did not last, but the episode offers a model for a resumption of progress if conditions improve. Notably, the IMF could provide technical assistance and training, collect economic data and provide information on its membership requirements and obligations. Cuban membership faces additional hurdles because of US laws that were targeted specifically at the government of Fidel Castro. Moreover, to this date, neither country has applied to join the IMF. Because every other country in the world, aside from the very smallest and those not generally recognized as states, has joined the IMF, it is virtually certain that Cuba will apply eventually, as will North Korea, unless that prospect is preempted by reunification of the Korean Peninsula. When they do apply, a concerted political commitment will be needed to overcome the remaining technical obstacles.
Topic:
Economics, International Trade and Finance, Political Economy, United Nations, and International Monetary Fund
Political Geography:
North Korea and Cuba

132. Is Indonesia the Next China?

Author:
Wendy Dobson
Publication Date:
02-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper reviews Indonesia’s economic prospects and what these imply for a closer relationship with Canada. By posing the question “Is Indonesia the next China?,” the author suggests that Indonesia has the considerable economic potential envisaged by foreign investors, but conveys uncertainty as to whether Southeast Asia’s most populous country can make the changes necessary to realize that potential. A review of the economic record and comparison of China’s and Indonesia’s economic structures, endowments and institutions show major differences between the two countries. The paper further questions what it will take to realize Indonesia’s potential, finding the answers to be: human capital development; increased participation in the region’s global value chains; meeting the growing middle-class demand for modern services; raising productivity in agriculture and fishing; and increasing use of the Internet. Failure to make these changes will increase the chances of Indonesia’s growth in per capita incomes slowing and falling into the middle-income trap. Canada’s role will be to monitor closely how Indonesia tackles its five priorities at the same time as it responds to the opportunities to exploit Indonesia’s abundant natural resources, urbanization and its expanding consumer demand for modern services and educational opportunities.
Topic:
Economics, Emerging Markets, Human Welfare, International Trade and Finance, Natural Resources, and Regulation
Political Geography:
China and Indonesia

133. CETA and Financial Services: What to Expect?

Author:
Patrick Leblond
Publication Date:
02-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) is possibly the most ambitious regional free trade agreement that Canada and the European Union have negotiated so far. One of its main components is a chapter that seeks to liberalize trade and investment in financial services between Canada and the European Union, while ensuring that markets and their agents will be properly regulated and protected through prudential regulation. However, this chapter is unlikely to have a significant impact on the financial services sector in Canada and the European Union in the short and medium term. Although some observers fear that CETA might undermine the high quality of financial regulations in Canada or the European Union, this paper’s analysis demonstrates that such concerns are unfounded.
Topic:
International Trade and Finance, Markets, Treaties and Agreements, and Regulation
Political Geography:
Canada and European Union

134. The Impact of Sustainability Codes of Conduct in the Financial Sector

Publication Date:
02-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper analyzes the impact of four major financial sector sustainability codes of conduct, the UN Environmental Programme Finance Initiative, the UN Principles for Responsible Investment, the Equator Principles and the Global Alliance for Banking on Values with regard to their impact on the sustainability of their members. The codes of conduct focus on the integration of environmental, social and governance criteria into financial decision making in lending, investment, asset management and project finance. corporate sustainability voluntary codes of conduct have a positive impact on their members. The effectiveness, however, depends on the quality and content of a code, as well as on implementation and compliance mechanisms.
Topic:
Economics, International Trade and Finance, Markets, United Nations, and Ethics
Political Geography:
Global Focus

135. Capital Flows to Emerging Market Economies: Feast or Famine Forever?

Author:
Malcolm D. Knight
Publication Date:
03-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
The past 20 years have witnessed a profound change in the types of non-resident investors who provide funding to emerging market economies (EMEs) and the nancial instruments through which emerging market (EM) corporations borrow from abroad. Until the beginning of the new millennium, private capital ows to EMEs were mainly intermediated by large global banks, and EMEs were subjected to massive volatility in their external payments balances, exchange rates and domestic nancial systems. But since the early 2000s the role of bank- intermediated credit has declined, as the base of investors willing to take on exposure to EM corporate debt has become much larger and more diverse. These structural changes have encouraged a vast growth in ows of funds, not only from the mature economies to EMEs as a group, but also among EMEs themselves.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
Global Focus

136. Education 3.0 and Internet Governance: A New Global Alliance for Children and Young People’s Sustainable Digital Development

Author:
Divina Frau-Meigs and Lee Hibbard
Publication Date:
03-2016
Content Type:
Policy Brief
Institution:
Centre for International Governance Innovation
Abstract:
Children and young people are increasingly reliant on the Internet for their everyday lives. They communicate, share and collaborate online; use it to learn and play; and recognize its importance for their adult working lives. Considering their increasing access, agency and autonomy in using content and services, their protection as a vulnerable group needs to be coupled with their education as emerging citizens to ensure they develop a healthy and positive relationship regarding the Internet. Their general well-being, participation in society and prospects of employment greatly depend on media and information literacy (MIL) as the new set of basic skills for the twenty- rst century, where computational thinking interfaces with the rich and diverse “cultures of information” (news, data, documents, codes and so on). This paper examines education and its digital transition, mindful of the post-2015 Sustainable Development Goals (SDGs) of the United Nations. It discusses a variety of perspectives and trends, arguing that the future of education should be part of the global debate on Internet governance. It posits that Internet governance offers a new form of legitimacy for children and young people to go beyond their current “protected” status. Active participation in Internet governance can empower them to become actors in policy deliberations. This can be achieved by developing a “frontier” eld integrating existing Internet studies with MIL, rede ned to comprise Internet governance principles, protocols and processes. This new eld can be integrated into the school curriculum as a key discipline. Such a digital transition from education 2.0 (where information and communication technology [ICT] are support tools) to education 3.0 (where MIL and Internet governance are the new basics) can provide children with competencies for cooperation, creativity and social innovation. It can also nurture their human rights and understanding of shared values, which, in turn, will help to build more inclusive societies. As a global resource managed in the public interest, the Internet depends not only on policy makers and decision makers, but also on education leaders, on the adults around children and, most importantly, on children themselves. Mindful of children’s cognitive development, cultural differences in the conceptualization of childhood and children’s exposure to all sorts of materials and resources online, this paper explores the mutually reinforcing opportunities for both children and the multi-stakeholder Internet community through their alliances in education and Internet governance.
Topic:
Education
Political Geography:
Global Focus

137. The European Union and Investor-State Dispute Settlement: From Investor-State Arbitration to a Permanent Investment Court

Author:
August Reinisch
Publication Date:
03-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Since the transfer of foreign direct investment powers from the European Union member states to the European Union itself in the 2009 Treaty of Lisbon, the European Commission, the main external trade actor for the European Union, has started to negotiate international investment agreements as well as investment chapters in enlarged free trade agreements (FTAs). Both contain substantive protection standards and enforcement mechanisms in case of disputes, usually both state–state and investor–state arbitration (ISA). With regard to the latter, it was unclear whether the European Commission, the European Union’s experienced World Trade Organization (WTO) litigator, would continue to use the interstate template of trade disputes or venture into ISA. After an initial orientation period, the European Commission rmly endorsed ISA, as demonstrated by the negotiations with Canada on the Comprehensive Economic and Trade Agreement (CETA) and with the United States on the Transatlantic Trade and Investment Partnership (TTIP). Meanwhile, however, public opposition to the TTIP, and to ISA in particular, has formed in unexpected dimensions. It even led the European Commission to partially interrupt its trade negotiations with the United States in order to conduct a public consultation on the investment aspects of the TTIP. Ever since, ISA has remained one of the most controversial parts of the planned trade agreements. Most recently, the European Commission tabled a TTIP proposal to set up a permanent investment court that would replace the system of ad hoc ISA. This paper analyzes in detail the development of the European Union’s position toward the use of ISA as a means for settling investor-state disputes.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
European Union

138. Responding to Security Challenges in East Asia: Three Perspectives

Author:
John Ravenhill
Publication Date:
04-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper examines the security context of the Australia- Indonesia relationship. East Asia presents a fundamental paradox for scholars of international relations. It has arguably more sources of interstate tension than any other region of the developing world. However, it has experienced no signi cant interstate con ict since the end of the China-Vietnam war in 1979. After brie y reviewing the principal security challenges that East Asia faces, the paper then looks at the three categories of explanations for the long peace in the region: hegemony and balancing; institutions and elite socialization; and economic interdependence. By early 2016, East Asia appeared to be facing the most unsettled security environment it has experienced for four decades. The new sources of interstate tensions present challenges for the mechanisms that have previously maintained peace in the region. Washington’s “pivot” to Asia has brought the United States into a more direct policy of balancing against China than in the past — but its sustainability and medium-term consequences remain unclear. Meanwhile, regional institutions, despite growing in numbers, are seemingly incapable of effectively addressing the new security challenges. A need for better leadership and initiatives is evident, both within the Association of Southeast Asian Nations (ASEAN) and in the broader regional context. Finally, recent developments in the region and elsewhere have illustrated the challenges of using economic interdependence as a lever over unwelcome state behaviour.
Topic:
International Security
Political Geography:
Indonesia and Australia/Pacific

139. Risks of a Selective Approach to Investor-State Arbitration

Author:
Hugo Perezcano
Publication Date:
04-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Investor-state arbitration (ISA) has been a controversial topic and a source of criticism and debate for quite some time. Yet, it continues to be a standard feature of modern international investment agreements (IIAs). While opposition to ISA has traditionally come from certain sectors of civil society, there appears to be a growing discomfort now among states as well. Some critics suggest that ISA is unnecessary and should be left out of IIAs altogether. Others argue that it may be needed in IIAs between developed nations that are mostly capital exporters, on the one hand, and developing countries that require foreign capital to promote development, on the other, but that it is unwarranted in IIAs that developed countries enter into among themselves. They reason that developed countries have robust legal frameworks and institutions, including responsive judiciaries, that adequately protect private investment and, therefore, ISA can safely be omitted from such IIAs without any detriment to foreign investors or their investments. This paper addresses some of the aws in the arguments that have been advanced in support of this position, as well as some of its implications, especially the reaction that might be expected from developing countries if developed countries were to back away from ISA in their dealings with other developed nations but continue to demand its inclusion in their agreements with developing countries.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
Global Focus

140. The Evolution of Bonding Technology, Creditor Committees and the IMF

Author:
James A. Haley
Publication Date:
04-2016
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
This paper reviews a range of issues associated with proposals for creditor engagement clauses (CECs) in sovereign bond contracts. CECs have moved onto the international policy agenda in the wake of the recent introduction of model “second-generation” collective action clauses (CACs) designed to address problems highlighted by the protracted litigation between Argentina and its holdout creditors. Speci cally, the new CACs should limit the ability of holdout creditors to impede restructurings acceptable to a supermajority of creditors and address the problematic interpretation of pari passu language that has plagued the Argentina debt restructuring. However, the introduction of these clauses, building on the foundation laid a decade ago by Mexico’s innovation of rst-generation CACs, has led some observers to express concerns that the sovereign debt restructuring playing eld has become “tilted” to the bene t of sovereign borrowers. Recent contractual innovations should be balanced, these experts contend, with CECs requiring sovereign issuers to convene and negotiate with creditor committees.
Topic:
International Security and Digital Economy
Political Geography:
Global Focus