Havana Charter
Encyclopedia
Havana Charter was the charter of the defunct International Trade Organization
(ITO). It was signed by 53 countries on March 24, 1948. It allowed for international cooperation and rules against anti-competitive business practices. The charter ultimately failed because the Congress of the United States rejected it. Elements of it would later become part of the General Agreement on Tariffs and Trade
(GATT).
The charter, proposed by John Maynard Keynes
, was to establish the ITO and a financial institution called the International Clearing Union
(ICU), and an international currency
; the bancor
. The Havana Charter institutions were to stabilize trade by encouraging nations to 'net zero,' with trade surplus and trade deficit both discouraged. This negative feedback
was to be accomplished by allowing nations overdraft
equal to half the average value of the country’s trade over the preceding five years, with interest
charged on both surplus and deficit.
International Trade Organization
The Bretton Woods Conference of 1944 recognized the need for a comparable international institution for trade to complement the International Monetary Fund and the World Bank...
(ITO). It was signed by 53 countries on March 24, 1948. It allowed for international cooperation and rules against anti-competitive business practices. The charter ultimately failed because the Congress of the United States rejected it. Elements of it would later become part of the General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
(GATT).
The charter, proposed by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
, was to establish the ITO and a financial institution called the International Clearing Union
International Clearing Union
The International Clearing Union was one of the institutions proposed to be set up at the 1944 United Nations Monetary and Financial Conference at Bretton Woods, New Hampshire by British economist John Maynard Keynes...
(ICU), and an international currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
; the bancor
Bancor
The Bancor was a supranational currency that John Maynard Keynes and E. F. Schumacher conceptualised in the years 1940-42 and which the United Kingdom proposed to introduce after the Second World War...
. The Havana Charter institutions were to stabilize trade by encouraging nations to 'net zero,' with trade surplus and trade deficit both discouraged. This negative feedback
Negative feedback
Negative feedback occurs when the output of a system acts to oppose changes to the input of the system, with the result that the changes are attenuated. If the overall feedback of the system is negative, then the system will tend to be stable.- Overview :...
was to be accomplished by allowing nations overdraft
Overdraft
An overdraft occurs when money is withdrawn from a bank account and the available balance goes below zero. In this situation the account is said to be "overdrawn". If there is a prior agreement with the account provider for an overdraft, and the amount overdrawn is within the authorized overdraft...
equal to half the average value of the country’s trade over the preceding five years, with interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
charged on both surplus and deficit.
External links
- Text of the Havana Charter - WTO official website
- Pages 5 and 6 of an economics paper
- Pages two and three of a paper concerning agricultural trade
- Page 1
- http://www.univie.ac.at/RI/KONTERM/intlaw/konterm/vrkon_en/html/descript/973.htm
- The WTO: An Historical, Legal, and Organizational Overview
- Can World Trade Ever Be Fair? by Susan George at CounterPunch.org
- Global Fracture a book by Michael Hudson that insightfully documents how developing countries have organized since the 1940s to restructure the global economic system, and failed every time.