Bretton Woods, 1944 — the conference and its logic

• Held at Bretton Woods, New Hampshire, in July 1944: 44 Allied nations met to rebuild the world economy after the Second World War. Led by the United States and Britain as an institution-building exercise — to prevent a repeat of the depressions and trade conflicts of the 1930s.
• Henry Morgenthau argued that the Depression, and the bitterness it bred, had fed the rise of fascism and war. A prosperous, interdependent world was treated as a condition for peace.
• The aim: a post-war order of consensus and cooperation, able to escape the self-defeating “beggar-thy-neighbour” protectionism of the inter-war years.

The three institutions

• International Monetary Fund (IMF) → currency stability; short-term balance-of-payments liquidity.
• International Bank for Reconstruction and Development (IBRD), later the World Bank → reconstruction, and long-term development.
• International Trade Organisation (ITO) → drafted at the Havana Conference, never ratified. Its place was taken by the General Agreement on Tariffs and Trade (GATT), 1947, and eventually by the WTO.

A fixed exchange-rate system, pegging currencies to the US dollar, which was itself convertible to gold.

Keynes and White — the contest that set the design

The shape of the system was settled by a contest between two architects.

Two blueprints, one winner

• Charles Kindleberger (The World in Depression): Bretton Woods worked because the United States supplied the leadership a stable order needs — and its later retreat from that role undid the system.
• Susan Strange (States and Markets): the settlement was an exercise of structural power that concentrated authority in the West and marginalised the Global South.

White’s victory built dollar hegemony into the foundations. Every later grievance — the US veto, conditionality, the privileged position of the dollar

traces back to the option Keynes lost.

The IMF and the World Bank — mandate compared

The Framework for Cooperation — where the twins work together: Annual meetings · Development Committee · Debt relief — HIPC, MDRI · Poverty reduction — PRSP · Millennium-goal monitoring · FSAP

Achievements — and the collapse of the system

What it delivered

• Between 1950 and 1975, world trade grew at nearly double the rate of world production.
• GATT entrenched non-discrimination, multilateralism and transparency as the benchmarks for judging trade practice; the IMF gave monetary affairs a degree of order.

Why it unravelled

The collapse, 1971. US deficits (Vietnam War + domestic spending under Lyndon Johnson) → Confidence in the dollar falls (by 1971 US gold reserves cannot back dollars held abroad) → Nixon Shock 1971 (— convertibility to gold ends) → Floating rates (the regime that still holds: volatility, but domestic policy space)

The shift brought volatility — but it also let states set monetary policy to domestic needs.

From GATT to the WTO

GATT, 1947 — what it was, and what it could not do

• A forum for tariff bargaining built on Most Favoured Nation treatment and reciprocity, allowing free-trade areas and customs unions that did not raise barriers.
• Eight rounds cut tariffs from about 40% of market value in 1947 to under 5% by 1993. Trade grew about 8% a year between 1950 and 1973, slowing to roughly 4% after the oil shocks.
• Its limits: agriculture stayed outside until the Uruguay Round; no effective dispute machinery; no cover for services or intellectual property; widely seen as tilted toward the industrialised countries.

The Uruguay Round (1986–94) — the eighth round

• Focused on TRIPS, TRIMS and agriculture. Third World countries feared TRIPS would expose infant industries — pharmaceuticals above all — to advanced-country competition, and that services liberalisation under TRIMS would flood their labour markets.
• Agriculture was the sharpest fault line: the United States pushed free trade and an end to subsidies; the EEC, France in particular, resisted. Washington threatened Super 301 action.
• Arthur Dunkel broke the deadlock with the Dunkel Draft.

GATT to WTO. GATT 1947 (tariff rounds · weak enforcement) → Uruguay Round 1986–94 (TRIPS · TRIMS · agriculture) → Dunkel Draft (signed 15 Dec 1993; ratified Dec 1994) → WTO 1 January 1995 (supersedes GATT, far wider mandate)

The WTO — principles, safeguards, and the two verdicts

• Coordinates world trade among 166 members (2024) on the principle of multilateralism.
• Core principles: MFN and National Treatment — foreign goods and services treated like domestic.
• A binding Dispute Settlement System is what set it apart from GATT.
• Its reach extends beyond goods to services (GATS) and intellectual property (TRIPS).

Cushions for weaker members

• Longer timelines to meet commitments; greater access in textiles and services.
• Anti-dumping and safeguard provisions; technical assistance.
• Maximum flexibility for Least Developed Countries.

A live fault line — the “developing country” designation

The United States has pressed to curb self-declaration, targeting China. China, India and South Africa defend self-declaration on per-capita grounds.

The two verdicts

• Robert Gilpin (Global Political Economy): credits the WTO with a rules-based regime that lends trade predictability and discourages trade wars.
• Joseph Stiglitz (Globalisation and Its Discontents): it advances liberalisation without equity — its intellectual-property regime favours developed economies.

Dispute settlement and the Appellate Body crisis

• The WTO’s judicial core: a binding, two-tier system — ad hoc panels, with appeal to a standing Appellate Body of seven members (a minimum of three to rule). It gave smaller economies protection against raw power.
• The United States, once its chief promoter, paralysed it. It accused the Body of straying from the Dispute Settlement Understanding after several US anti-dumping and countervailing measures were found inconsistent with WTO rules.
• Washington blocked new appointments from 2017 and, in December 2019, cut off funding — reducing the Body first to a single member, then to none.

The scholarly split

• Joseph Weiler: a legitimacy crisis for the multilateral system.
• D. Ravi Kanth: the US obstructed appointments precisely because a working Body blocked its unilateral measures.
• J.S. Deepak: imperfect though it was, the mechanism curbed unfair trade practices and strengthened the rules-based order.
• Vineet Hegde: with rising protectionism, states keep retaliating and raising barriers — an unbroken spiral.

Where it stands now

• Non-functional since December 2019. A 130-member proposal to restart appointments has been blocked many dozens of times.
• Losing parties now “appeal into the void” — over thirty disputes and counting — while an EU-led interim arbitration arrangement covers much of world trade as a stop-gap.
• WTO panels found the US steel and aluminium tariffs inconsistent with the rules; with no appeal to hear them, the findings had no effect.
• Consensus among 166 members has stalled reform since the 2018 agenda under Roberto Azevedo.
• Richard Baldwin calls the wider assault a “Great Trade Hack” and speaks of a “reform or die” moment. Pascal Lamy: the world must reform, not bury, the WTO.
• Way forward: restore appeals, bar unilateral measures, place development at the centre.

The argument is not abolition but authorship

who writes and enforces the rules.

Decline of the WTO

The purpose that has been lost GATT and the WTO rested on interdependence, transparency and predictability — a prosperous, trading world was thought less likely to go to war. Tariffs fell from about 40% (1947) to under 5% (1993).

• Rising protectionism and trade wars — the US–China tariff war on hundreds of billions of dollars of goods. Dani Rodrik: economic nationalism as a backlash against globalisation.
• Dysfunctional dispute resolution — the blocked Appellate Body. Robert Keohane: once the court cannot rule, the incentive to comply erodes.
• Fragmentation into bilateral and regional blocs — CPTPP, RCEP. Joseph Stiglitz: such deals undermine universal rules.
• Geopolitical rivalry — John Ikenberry ties the strain to the unipolar-to-multipolar transition. Failure to regulate e-commerce, digital trade and climate-linked measures; Susan Strange saw this as a slide into irrelevance.
• Institutional paralysis — consensus among 166 members and weak enforcement leave rulings ignorable; US withdrawal from multilateral commitments and unilateral sanctions (Iran, Russia) compound it.

The live illustration — the tariff wars of 2025–26

• The April 2025 US “reciprocal” tariffs — a universal baseline duty plus country-specific rates — were the sharpest turn to protectionism in decades, likened to the Smoot-Hawley Act of 1930. India briefly faced among the highest rates.
• In February 2026, the US Supreme Court held that the emergency-powers statute did not authorise them, forcing a redesign.

Close on reform, not burial: equitable globalisation needs a reformed WTO, not an abandoned one.

The fisheries-subsidies deadlock

Why subsidies are the problem

• Governments spend about US$35 billion a year on fisheries subsidies. Fuel subsidies make up about 22% and push distant-water fleets into the waters of poorer states.
• Stocks at biologically sustainable levels fell from 90% (1974) to 65.8% (2017).
• Over three billion people rely on fish for about 20% of their animal protein — a share that reaches half in Bangladesh, Cambodia, Indonesia and Sri Lanka.

The MC12 Agreement — and what it left open

• The Agreement on Fisheries Subsidies, adopted at MC12 on 17 June 2022, was the first WTO agreement centred on the environment, the first SDG target met through a multilateral deal, and only the second agreement reached since the WTO’s creation.
• Three pillars — illegal, unreported and unregulated fishing; overfished stocks; the high seas. It rests on the polluter-pays principle and common but differentiated responsibilities.
• Overcapacity disciplines stay unresolved — the draft is still heavy with bracketed text on fuel and vessel subsidies.

• India’s stand: fuel rebates, motorisation of boats and infrastructure support fall under the targeted list. It seeks flexibility within its exclusive economic zone, and argues that heavy past subsidisers should carry more of the obligation.
• Simon Evenett: Special and Differential Treatment is essential for fairness, but a source of prolonged conflict — developed states fear it dilutes the deal.

The deadlock is a genuine conflict of interests, not obstruction: ocean sustainability set against the livelihoods of the poorest fishers. India’s position — conservation cannot be financed by the food security of the Global South.

India and the WTO

Since 1995 the WTO has been the forum where India advances trade and development goals against larger economies. Amrita Narlikar points to India’s role as a Global South leader on agricultural subsidies and public stockholding.

Food security — the core fight

• India seeks a permanent solution to protect procurement at Minimum Support Price for over 800 million beneficiaries, having secured its programmes through the Bali Package (2013).
• It refuses to dismantle its amber-box support — arguing, with Stiglitz and Rodrik, that developing countries need policy space within the rules.

India’s positions across the agenda

• Opposes a China-led investment-facilitation pact as outside the WTO’s mandate.
• Presses a CBDR line on fisheries.
• Seeks to end the moratorium on customs duties on electronic transmissions.
• Resists trade linkage with labour and the environment — preferring the ILO, and objecting to the EU’s carbon border tax and deforestation rules.
• Co-sponsored a dispute-settlement reform proposal with the EU; opposed a 2018 US move to bar “defaulters” from presiding over WTO bodies.
• Defends the body’s consensus-driven character, calling it an “engine for global trade.”

The IMF and India — conditionality and the arc since 1991

• India drew IMF support during the 1991 balance-of-payments crisis, which triggered liberalisation shaped by the Washington Consensus (John Williamson): liberalisation, privatisation, globalisation.
• Joseph Stiglitz faults the Fund’s blanket loan conditions for imposing austerity that raises suffering; Erik Reinert for privileging fiscal balance over growth.
• The pattern is visible in the Sri Lankan crisis (2022) and the Pakistani bailout (2023), where loan conditions brought welfare cuts and protests.
• Susan Strange: the Fund is a mechanism of discipline rather than development.
• India has moved from aid recipient toward aid provider. Rakesh Mohan and Devesh Kapur place it at the front of efforts to reform IMF governance.

Rising powers and the reform of the Bretton Woods twins

The two institutions were built for the world of 1944. The arithmetic still shows it.

• Voting in the IMF is quota-based: the United States holds about 16.5% of votes and an effective veto, since major decisions need an 85% majority.
• By a standing “gentleman’s agreement,” the Managing Director is a European and the World Bank President an American. On the Board of Governors the G7 hold a combined ~43%.
• The BRICS — nearly half the world’s population, about a fifth of output — historically held only around 11% of votes.

How the rising powers are pushing back

• Quota reform: the 2010 package moved India from 2.3% to 2.6% and China from 3.8% to 6%, transferring about 6% of quota to emerging economies and doubling the Fund’s permanent resources. Rising powers also seek to move some two dozen IMF board seats from Europe to the developing world.
• Alternative institutions: the Asian Infrastructure Investment Bank, the BRICS New Development Bank and the Contingent Reserve Arrangement — South–South finance without harsh conditionality. China is now a top contributor and presses to loosen the dollar’s reserve role.
• The theory shifts with it: from hegemonic stability theory (Charles Kindleberger, Joseph Nye) toward the cobweb model (John Burton) and complex interdependence (Robert Keohane and Joseph Nye).

Where reform actually stands

• The 16th General Review of Quotas raised the Fund’s resources by half but left voting shares unchanged, keeping the US veto intact; realignment is deferred to the next review.
• The three pillars survived 2008 — its chief institutional fruit was the Financial Stability Board (April 2009), from the G20 London summit.
• Mia Mottley’s Bridgetown Initiative and Nicholas Stern demand that climate vulnerability count in development lending. India’s G20 presidency (2023) placed institutional reform at the centre.
• Thomas Weiss: incremental reform is insufficient when the architecture itself is obsolete.

The verdict The machinery is real and so are its asymmetries. Rising powers are moving from norm-takers to norm-shapers, but entrenched Western control and the risk of fragmentation cap how far the challenge reshapes the order

reform proceeds by increments, not rupture.

Criticism and the legitimacy crisis

The structural critique

• Susan Strange: a structural bias toward developed nations.
• Martin Khor: the institutions are a “rich man’s club.”
• Joseph Stiglitz: they have become “part of the problem rather than the solution.”
• Robert Cox: institutions are never neutral.
• Noam Chomsky: tools of transnational capital — echoing the Latin American structuralists on the “development of underdevelopment.”
• Amrita Narlikar: multilateralism cannot survive on exclusionary foundations.

The reform reading

• Ngaire Woods: a changing development paradigm.
• Amrita Narlikar: assertiveness read as a quest for recognition.
• Oliver Stuenkel: the new banks are a pragmatic reshaping.
• Miles Kahler: absent reform of IMF and World Bank governance, rising powers become “responsible stakeholders” or build parallel institutions.
• Zhao Gancheng: a shift from norm compliance to norm creation.

Reforming the Bretton Woods system — three models

Financial and economic crises have grown more frequent and severe since the 1980s, generating competing models of reform.

• What actually happened: the three pillars survived. Voting rights adjusted modestly toward developing countries, but fundamental power balances remained. The main institutional change was the Financial Stability Board (2009); emerging economies also built the AIIB, NDB and BRICS CRA, with China calling to replace the dollar as reserve currency.
• Miles Kahler: absent reform of IMF and World Bank governance, rising powers could either become “responsible stakeholders” or build parallel institutions.