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International Chamber of Commerce: Constructivist and Liberalist Theories

2456 words (10 pages) Business Assignment

10th Nov 2020 Business Assignment Reference this

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The International Chamber of Commerce (ICC) is the largest business organization in the world, it was formed in 1919 for the purpose of promoting open trade and a free financial market. It provides a forum for businesses and organizations to work together to examine the nature of major shifts taking place in the world economy. Today the international organization represents business interests of approximately 140 countries with over 90 national ICC offices worldwide. The ICC is an effective international organization as contested through the constructivist and liberalist theories approach and points of view.

The ICC promotes trade and investment and open markets for goods and services by creating rules and regulation agreed upon by its member countries. The agency’s dispute resolution, rule setting and policy advocacy allows for sustainable development, job creation and maintains the economy. The 3 primary activities of the ICC are dispute resolution, rule setting and policy advocacy. These tasks are deliberately divided among its governing body, composed of the world council, executive board, and the international secretariat. In addition, the ICC has the finance committee and every member has its own national committee. Other branches of the ICC include the international anti-corruption commission, the international court of arbitration, and the business action to stop counterfeiting and piracy otherwise known as BASCAP. 

In part the ICC is considered the catalyst for economic growth, job creation, and prosperity throughout the world. The organization oversees and facilitates activities and business decisions in the best interest of economic development. Its role has also grown and expanded to become a business advocate and advisor to governments and intergovernmental agencies. Among these activities are assisting with self-regulation, working against corruption and commercial crimes, and supporting open trade and marketing healthy economic systems.

Moreover, the agency’s activities and structure can be attributed to the contrasting international relations theoretical approaches that emerge from disciplines of economics or sociology. In particular, the theories of constructivism and liberalism are exemplified internally and externally by the international organization’s affairs and work as well as its composition. Nevertheless, it doesn’t disregard the realism theory and its ideas in the international system as the international organization was created to ensure equal representation. In order to prevent a central authority or coercion by a hegemonic country like Mearsheimer or Waltz suggest would happen under a realist approach.

The liberalism approach is that national characteristics of individual states matter for their international relations. With this basic insight of the theory in mind, the general purpose and essentially the organizations role is derived. The ICC demonstrates like liberal theorist the fundamental role the IO has in international relations especially through a forum with fixed constraints on power distribution. To highlight, the IO resembles a liberalist approach internally through its structure; international secretariat and executive board. The international secretariat – or the secretary general appointed by the world council leads the body on issues that directly affect business operations and develops and carries out the work programmed by the ICC. The organ is the operational component of the IO as it ensures the worked approved by the World Council is achieved. The current secretary general of the ICC is John W.H. Denton. The executive board is compromised of approximately 15-30 members and implements policies approved by the ICC. Each member serves for 3 years.

Similarly, it has liberalist qualities and characteristics externally through its affairs and work efforts. The ICC’s committees and commissions as well the International Court of Arbitration further identify liberal characteristics used to design the mechanisms and institutions that have become useful sources intended to have an impact on domestic and international policies.  For example, the International Anti-Corruption Commission, the commission is an attempt by the ICC to create  a body that  would promote  self-regulation against bribery and corruption among businesses. The commission has 90 members from 34 countries, and they meet twice a year to discuss issues of interest pertaining to an ethical global business environment. Another example is the ICC International  Court   of  Arbitration. This entity is the oldest established within the ICC institution, and its main duty is to resolve international commercial  disputes via an arbitration process. The use of this arbitration process in the international system guarantees the members will receive (1) a fair trial and avoid potential bias by national courts, (2) avoid bad publicity or damaging press, and (3) maintain confidentiality. Not to mention, arbitration is quicker and less expensive than litigation and an organization does not have to be part of the ICC to partake in the process. Parties involved in the dispute also are granted the privilege of deciding what form of arbitration will be used to resolve the dispute. They are allowed to choose their own arbitrators, the location of arbitration, and the appropriate laws.

The ICC also has held and continues to be affiliated with several other international organizations such as the World Trade Organization (WTO), United Nations, G20, International Monetary Fund, World Bank and the Organization for Economic Cooperation and Development (OECD). Correspondingly, once the United  Nations was formed in 1945, the ICC held a consultative status within the IO and its agencies. The goal in mind was to ensure the UN was informed and had international business views present when making crucial decisions during meetings. Thus, the ICC became a neutral entity that could champion corporate responsibility in order to achieve in the best interests of its business transactions.In effect, it has been effective under the liberalist approach as it continues to exert its international influence to promote business interests on behalf of its members’ individual concerns. To point out, it’s International Court of Arbitration has administered a total of 842 cases in 2018, the second highest of registered international cases ever. It is also important to note the average amount of a dispute is approximately $45 million. The ICC holds the world’s leading arbitration institution, which has overseen more than 24,000 cases.

The ICC, however, also convincingly portrays a constructivist approach. In contrast to the liberalist or realist theories, the constructivist ontology focuses on the social norms in international politics when considering interests. This attention to social context allows the constructivist to emphasize the issues of identity and belief found within different states or rational actors. According to Wendt, social meanings explain state’s behavior  which becomes a key determinant in hence their interests. Once again, the IO demonstrates this through its affairs and structure both internally and externally. The ICC following the constructivist approach as ‘norm entrepreneurs’ notes the importance and significance of the role international agencies can have. These international organizations may even create international bureaucracies that seek to pursue their own interests perhaps even against the wishes of the actors that created them. To further prove this concept as noted by Barnett and Finnemore,  the ICC developed a committee to fight issues that impacted the maximization of their business interests as the IO advanced. Piracy attacks, corruption, and robbery are amongst the most controversial issues the organization faces yet, it has created a committee whose mission is to protect the integrity of international trade by seeking out fraud and malpractice. The International Maritime Bureau primarily focuses on authenticating trade finance documents and investigates and reports on credit fraud, cargo theft, and ship finance fraud, but perhaps its most important function in recent years has been the 1992 establishment of the IMB Piracy Reporting Centre in Kuala Lumpur, Malaysia. The Centre has become a leading source of information about maritime piracy and “maintains a round-the-clock watch on the world’s shipping lanes, reporting pirate attacks to local law enforcement and issuing warnings about piracy hotspots to shipping” (ICC Commercial Crime Services, n.d.). In fact, another committee that promotes non-interference efforts is BASCAP ( Business Action to Stop Counterfeiting and Piracy) committed to protect intellectual property rights. BASCAP was formed to link all of the business sectors in an  effort to fight counterfeiting and piracy on a global scale.

Consequently, the constructivist approach has been ideal when targeting issues that arise while taking into consideration the social context that might affect actor’s or state’s interests. Resulting into effective measure that allow the IO to combat any challenges that might interfere with its interests. For this reason, those committees and divisions mentioned previously as well as initiatives or efforts such as the INCOTERMS have been developed accordingly to the social norm’s incentives. The INCOTERMS provide internationally accepted definitions and rules of interpretation for most the common and commercial terms used in contracts for the sale of goods.  The INCOTERMS have prominently become the primary platform for small starting businesses or corporations to establish an industry standard for trade. In actuality, the first publication of the INCOTEMRS by the ICC occurred in 1936, as the IO was determined to bring forth prosperity to a divided post-World War I era.

Nevertheless, as has been noted the Realism theory also played a significant role that has affected how the IO has continued to evolve as time goes on.  Granted, as Mearsheimer maintains, it is the need of this so called- offensive strategy that incentivizes the state/actor to join said international organization as it avoids any direct threat because no rival country would dominate. Instead, the IO reflects a balance of power in the international system by creating roughly equal distribution of power amongst state through a forum which ensures that none will risk attacking each other. Therefore, avoiding ‘polarity’ amongst great powers which is a key concept in realist theory. Thereupon, the ICC creates an international law and allows for an international institution to become the platform or intermediary thus allowing an established platform to become enforcement of these agreed upon rules which as a result allow cooperation. The ICC receives no government funding and has four main sources of income; (1) membership fees, (2) events, (3) sponsorships, and (4) publications. Since the IO is a nongovernmental organization that works similar to private sector institution due to private funding, it can overcome bureaucratization and be an efficient means of resolving arbitration disputes.

To summarize, the International Chamber of Commerce has persevered for over 100 years and continues to be of high relevance in the international business relations. The international organization holds effective as it maintains close in touch with the views of international business relations. The ICC makes rules conducted towards businesses across borders facilitating transactions and has become part of global trade networks. The ICC’s representation of business organizations, companies, or nations in every region of the world are further encouraged and assisted by the IO’s main activities; rule setting, dispute resolution, and policy advocacy. As can be seen, the IO has developed and persevered in spite of the diversity of variables of interests from each actor that apply in the international system. The relations amongst nations have demonstrated effective nonetheless, as ICC utilizes the three different approaches regarding international relations; realism, liberalism and constructivism. The IO effectively uses their schools of thought in order to develop strategies to promote and protect the business interests that it seeks to ensure in the global system for its members.

Works Cited

  • “Appendix III:  International  Chamber of Commerce  ICC)  National  Committees  and  Groups,” Handbook of World Trade (2004);
  • Bate, “Part 1: The Origins and Nature of the World Trade Organization: Forging the Tools of Trade—Core Tasks of the International Chamber of Commerce,” Handbook of World Trade (2004);
  • “Ellen, Eric Frank, (Born 30 Aug. 1930), Chairman and Director, First Approach Ltd, since 1999; Board Member, International Chamber of Commerce Commercial Crime Services, 1999–2001 (Executive Director, 1994–99; First Director: International Maritime Bureau, 1981–99; Counterfeiting Intelligence Bureau, 1985–99; Commercial Crime Bureau, 1992–99; Regional Piracy Centre, Kuala Lumpur, 1992–99); Consultant, ICC, 1999–2002.” Whos Who, Jan. 2007, doi:10.1093/ww/9780199540884.013.u14815.
  • “Maritime Piracy Incidents down in Q3, Yet Gulf of Guinea Remains a Hot Spot.” ICC Commercial Crime Services, https://www.icc-ccs.org/.
  • “Frequently Asked Questions.” International Chamber of Commerce United Kingdom, https://iccwbo.myshopify.com/pages/faqs-1.
  • “International Chamber of Commerce.” International Chamber of Commerce - an Overview | ScienceDirect Topics, https://www.sciencedirect.com/topics/economics-econometrics-and-finance/international-chamber-of-commerce.
  • Dieter, Martiny. “International Chamber of Commerce (ICC).” Max Planck Encyclopedia of Public International Law, 2009, doi:10.1093/law:epil/9780199231690/e950.
  • “Figure 2f from: Irimia R, Gottschling M (2016) Taxonomic Revision of Rochefortia Sw. (Ehretiaceae, Boraginales). Biodiversity Data Journal 4: e7720. Https://Doi.org/10.3897/BDJ.4.e7720.” doi:10.3897/bdj.4.e7720.figure2f.
  • Published in: Wolfrum, R. (Ed.) Max Planck Encyclopedia of Public International Law
  • (Oxford University Press, 2011) www.mpepil.com
  • William F. Fox, “The International Chamber  of Commerce’s GUIDEC Principles: Private-Sector  Rules for Digital Signatures,” International Lawyer (v.35, 2001);
  • Dominic Kelly, “The International Chamber of Commerce,” New Political Economy (v.10/2, 2005).

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