What is a Trade agreement and a Trade organization? Trade Agreement: • An agreement that governs aspects of trade among countries. Trade Organization: • Associations that represent the interests of companies, or type of business-related activities with bylaws, standards, and a business code of ethics.
Brief History • The Organization of the Petroleum Exporting Countries is a permanent, intergovernmental Organization that was created in September, 1960 at the Baghdad Conference by five Founding Members. • Over the years, nine other countries have joined the organization. • In 1992, Ecuador suspended its membership from the organization until 2007. • Gabon was once a part of the organization in 1975, but terminated it in 1995. • Also, Indonesia joined the organization in 1962, but suspended it in 2009. The OPEC is now located in Vienna, Austria.
countries involved • Iran (1960) • Iraq (1960) • Kuwait (1960) • Saudi Arabia (1960) • Venezuela (1960) • Qatar (1961) • Libya (1962) • United Arab Emirates (1967) • Algeria (1969) • Nigeria (1971) • Ecuador (1973) • Angola (2007)
Main objective • The main objective of the Organization of the Petroleum Exporting Countries is to coordinate petroleum policies of the organization’s members to ensure that oil markets remain stable and secure. • This organization also regulates the supply of petroleum to consumers, maintains a steady income for producers and it makes sure that a high price is received for oil.
Advantages of the agreement • Connects different countries • Regulates/Control oil prices • Helps economic growth • Helps market stability • Good way to provide a regular supply to the consuming nations • Better access to resources of producing countries
Disadvantages of the agreement • Might have too much control of oil • Can hurt non-members by limiting oil supply • Difficult for member countries to agree on its policies
Benefits • Even though Canada is rich in oil, it is not included in the OPEC, therefore it does not benefit Canada directly, only Middle Eastern Countries.
Interesting facts • Member countries can only become “Full Members” if they are accepted by the majority of three-fourths of Full Members. • In 1973 the OPEC began restricting oil product among its members. • December 1985, the organization eliminated production restrictions. • The rise in prices caused nations to cheat by raising product levels to increase their profits.
Brief history • The IMF was suggested in 1944 and became official in December 1945. • When the international monetary cooperation fell apart in the 1930’s during the great depression, the idea of the IMF was created. • The IMF was created to monitor and bring stability to the International monetary system.
Countries involved • There are a total of 188 countries involved in the IMF. • Some of the Major ones include; Canada, China, Germany, France, Japan, the United States, and the United Kingdom.
Main Objective • IMF is a multi-governmental organization that focuses on international monetary cooperation and stability in foreign exchange. • Also, it provides temporary financial assistance to countries to help ease economic difficulties due toa variety of problems. • The global entity ensures the stability of the exchange rate and encourage its member countries to eliminate exchange restrictions that restrict trade.
Benefits to global trade • Helps to boost economies which helps boost trade which in turn helps boost trade because then the countries have more money for trade • The volume of international trade has risen sharply since the 1990’s(world exports to world GDP has increased from 19 percent in 1990 to 31 percent in 2006). • Cross-border capital flows have soared (increased 4 percent or world GDP in 1990 to about 14 percent in 2006).
Limitations of the organization • The boost to IMF resources should reach about $750 billion • IMF is an insurer • The FLC (foreign legal consultants) may create a strong new IMF role that goes above the global financial crisis, especially providing an insurance plan for countries that follow economic policies. • Surveillance limitations
Interesting facts • Members of the IMF can leave or join at any time. • The IMF was formed at Bretton Woods Conference in 1944 • Created and is based in the United States
Quiz • 1. How many members does the OPEC have? • 2. What country terminated its membership? • 3. When was the OPEC founded? • 4. What is Petroleum? • 5. What does the IMF do? • 6. What does IMF stand for? • 7. What is the FLC? • 8. Name two countries in the IMF.