{"id":3559,"date":"2026-08-11T22:11:58","date_gmt":"2026-08-11T16:41:58","guid":{"rendered":"https:\/\/forumias.com\/psir\/notes\/from-bretton-woods-to-wto\/"},"modified":"2026-08-12T02:57:31","modified_gmt":"2026-08-11T21:27:31","slug":"from-bretton-woods-to-wto","status":"publish","type":"psir_note","link":"https:\/\/forumias.com\/psir\/notes\/from-bretton-woods-to-wto\/","title":{"rendered":"From Bretton Woods to WTO"},"content":{"rendered":"<div class=\"n-wrap\">\n<div class=\"n-shell\">\n<div class=\"n-crumb\"><a href=\"\/psir\/psir-notes\/\">PSIR Notes<\/a><span class=\"sep\">\u203a<\/span><a href=\"\/psir\/psir-notes\/#ii-a\">II-A Comparative Political Analysis and International Politics<\/a><span class=\"sep\">\u203a<\/span><span>From Bretton Woods to WTO<\/span><\/div>\n<header class=\"n-head\">\n<div class=\"n-eyebrow\">Paper I \u00b7 Comparative Political Analysis and International Politics<\/div>\n<h1 class=\"n-title\">From Bretton Woods to WTO<\/h1>\n<div class=\"n-syl\"><b>Syllabus \u00b7 Paper II-A \u00b7 8<\/b> \u2014 Evolution of the International Economic System : From Brettonwoods to WTO; Socialist economies and the CMEA (Council for Mutual Economic Assistance); Third World demand for new international economic order; Globalisation of the world economy.<\/div>\n<\/header>\n<div class=\"n-grid\">\n  <main class=\"n-body\"><\/p>\n<h3 id=\"bretton-woods-1944-the-conference-and-its-logic\">Bretton Woods, 1944 \u2014 the conference and its logic<\/h3>\n<ul>\n<li>Held at <span class=\"n-term\">Bretton Woods, New Hampshire, in July 1944<\/span>: <span class=\"n-term\">44 Allied nations<\/span> met to rebuild the world economy after the Second World War. Led by the <span class=\"n-term\">United States<\/span> and <span class=\"n-term\">Britain<\/span> as an institution-building exercise \u2014 to prevent a repeat of the depressions and trade conflicts of the 1930s.<\/li>\n<li><span class=\"n-sch\">Henry Morgenthau<\/span> 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 <span class=\"n-term\">condition for peace<\/span>.<\/li>\n<li>The aim: a post-war order of consensus and cooperation, able to escape the self-defeating <span class=\"n-term\">\u201cbeggar-thy-neighbour\u201d<\/span> protectionism of the inter-war years.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The three institutions<\/span><\/p>\n<ul>\n<li><span class=\"n-term\">International Monetary Fund (IMF)<\/span> \u2192 currency stability; short-term balance-of-payments liquidity.<\/li>\n<li><span class=\"n-term\">International Bank for Reconstruction and Development (IBRD)<\/span>, later the <span class=\"n-term\">World Bank<\/span> \u2192 reconstruction, and long-term development.<\/li>\n<li><span class=\"n-term\">International Trade Organisation (ITO)<\/span> \u2192 drafted at the <span class=\"n-term\">Havana Conference<\/span>, never ratified. Its place was taken by the <span class=\"n-term\">General Agreement on Tariffs and Trade (GATT), 1947<\/span>, and eventually by the <span class=\"n-term\">WTO<\/span>.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p>A <span class=\"n-term\">fixed exchange-rate system<\/span>, pegging currencies to the <span class=\"n-term\">US dollar<\/span>, which was itself convertible to gold.<\/p>\n<\/blockquote>\n<h3 id=\"keynes-and-white-the-contest-that-set-the-design\">Keynes and White \u2014 the contest that set the design<\/h3>\n<p>The shape of the system was settled by a contest between two architects.<\/p>\n<p><span class=\"n-term\">Two blueprints, one winner<\/span><\/p>\n<div class=\"n-tw\">\n<table>\n<thead>\n<tr>\n<th><span class=\"n-sch\">J.M. KEYNES<\/span> \u2014 International Clearing Union \u00b7 the <em>Bancor<\/em> \u00b7 symmetric adjustment<\/th>\n<th><span class=\"n-sch\">H.D. WHITE<\/span> \u2014 Dollar supremacy \u00b7 US interests<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span class=\"n-sch\">John Maynard Keynes<\/span> wanted a neutral reserve currency and the burden of adjustment shared between creditors and debtors. He warned against poorly regulated markets.<\/td>\n<td><span class=\"n-sch\">Harry Dexter White<\/span>, for the US Treasury, pressed for dollar supremacy. <span class=\"n-term\">His view prevailed<\/span> \u2014 the dollar became the de facto global currency, letting Washington shape world finance.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<ul>\n<li><span class=\"n-sch\">Charles Kindleberger<\/span> (<em>The World in Depression<\/em>): Bretton Woods worked because the United States supplied the leadership a stable order needs \u2014 and its later retreat from that role undid the system.<\/li>\n<li><span class=\"n-sch\">Susan Strange<\/span> (<em>States and Markets<\/em>): the settlement was an exercise of <span class=\"n-term\">structural power<\/span> that concentrated authority in the West and marginalised the Global South.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p>White\u2019s victory built <span class=\"n-term\">dollar hegemony<\/span> into the foundations. Every later grievance \u2014 the US veto, conditionality, the privileged position of the dollar<\/p>\n<p><cite>traces back to the option Keynes lost.<\/cite><\/p><\/blockquote>\n<h3 id=\"the-imf-and-the-world-bank-mandate-compared\">The IMF and the World Bank \u2014 mandate compared<\/h3>\n<div class=\"n-tw\">\n<table>\n<thead>\n<tr>\n<th>Parameter<\/th>\n<th>IMF (191 members)<\/th>\n<th>World Bank Group<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span class=\"n-term\">Purpose<\/span><\/td>\n<td>Monetary cooperation; exchange-rate stability; surveillance of the world economy<\/td>\n<td>Long-term development and poverty reduction<\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Lending<\/span><\/td>\n<td>Short-to-medium-term balance-of-payments loans, tied to policy <span class=\"n-term\">conditions<\/span>; capacity building<\/td>\n<td>Project and programme finance through the <span class=\"n-term\">IBRD, IDA, IFC and MIGA<\/span><\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Funding<\/span><\/td>\n<td>Member quotas<\/td>\n<td>Member quotas and bond issuance<\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Governance<\/span><\/td>\n<td><span class=\"n-term\">Quota-based voting<\/span> gives the United States an effective veto<\/td>\n<td>By convention the President is an American; the IMF Managing Director a European<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p><span class=\"n-term\">The Framework for Cooperation \u2014 where the twins work together:<\/span> Annual meetings \u00b7 Development Committee \u00b7 Debt relief \u2014 HIPC, MDRI \u00b7 Poverty reduction \u2014 PRSP \u00b7 Millennium-goal monitoring \u00b7 FSAP<\/p>\n<h3 id=\"achievements-and-the-collapse-of-the-system\">Achievements \u2014 and the collapse of the system<\/h3>\n<p><span class=\"n-term\">What it delivered<\/span><\/p>\n<ul>\n<li>Between <span class=\"n-term\">1950 and 1975<\/span>, world trade grew at nearly <span class=\"n-term\">double the rate of world production<\/span>.<\/li>\n<li>GATT entrenched <span class=\"n-term\">non-discrimination<\/span>, <span class=\"n-term\">multilateralism<\/span> and <span class=\"n-term\">transparency<\/span> as the benchmarks for judging trade practice; the IMF gave monetary affairs a degree of order.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Why it unravelled<\/span><\/p>\n<p><span class=\"n-term\">The collapse, 1971.<\/span> <span class=\"n-term\">US deficits<\/span> (Vietnam War + domestic spending under <span class=\"n-term\">Lyndon Johnson<\/span>) \u2192 <span class=\"n-term\">Confidence in the dollar falls<\/span> (by 1971 US gold reserves cannot back dollars held abroad) \u2192 <span class=\"n-term\">Nixon Shock 1971<\/span> (\u2014 convertibility to gold ends) \u2192 <span class=\"n-term\">Floating rates<\/span> (the regime that still holds: volatility, but domestic policy space)<\/p>\n<p><em>The shift brought volatility \u2014 but it also let states set monetary policy to domestic needs.<\/em><\/p>\n<h3 id=\"from-gatt-to-the-wto\">From GATT to the WTO<\/h3>\n<p><span class=\"n-term\">GATT, 1947 \u2014 what it was, and what it could not do<\/span><\/p>\n<ul>\n<li>A forum for tariff bargaining built on <span class=\"n-term\">Most Favoured Nation<\/span> treatment and <span class=\"n-term\">reciprocity<\/span>, allowing free-trade areas and customs unions that did not raise barriers.<\/li>\n<li><span class=\"n-term\">Eight rounds<\/span> cut tariffs from about <span class=\"n-term\">40% of market value in 1947 to under 5% by 1993<\/span>. Trade grew about <span class=\"n-term\">8% a year between 1950 and 1973<\/span>, slowing to roughly <span class=\"n-term\">4%<\/span> after the oil shocks.<\/li>\n<li><span class=\"n-lab\">Its limits<\/span>: 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.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The Uruguay Round (1986\u201394) \u2014 the eighth round<\/span><\/p>\n<ul>\n<li>Focused on <span class=\"n-term\">TRIPS, TRIMS and agriculture<\/span>. Third World countries feared TRIPS would expose infant industries \u2014 <span class=\"n-term\">pharmaceuticals above all<\/span> \u2014 to advanced-country competition, and that services liberalisation under TRIMS would flood their labour markets.<\/li>\n<li><span class=\"n-lab\">Agriculture was the sharpest fault line<\/span>: the United States pushed free trade and an end to subsidies; the <span class=\"n-term\">EEC, France in particular<\/span>, resisted. Washington threatened <span class=\"n-term\">Super 301<\/span> action.<\/li>\n<li><span class=\"n-sch\">Arthur Dunkel<\/span> broke the deadlock with the <span class=\"n-term\">Dunkel Draft<\/span>.<\/li>\n<\/ul>\n<p><span class=\"n-term\">GATT to WTO.<\/span> <span class=\"n-term\">GATT 1947<\/span> (tariff rounds \u00b7 weak enforcement) \u2192 <span class=\"n-term\">Uruguay Round 1986\u201394<\/span> (TRIPS \u00b7 TRIMS \u00b7 agriculture) \u2192 <span class=\"n-term\">Dunkel Draft<\/span> (signed <span class=\"n-term\">15 Dec 1993<\/span>; ratified <span class=\"n-term\">Dec 1994<\/span>) \u2192 <span class=\"n-term\">WTO 1 January 1995<\/span> (supersedes GATT, far wider mandate)<\/p>\n<h3 id=\"the-wto-principles-safeguards-and-the-two-verdicts\">The WTO \u2014 principles, safeguards, and the two verdicts<\/h3>\n<ul>\n<li>Coordinates world trade among <span class=\"n-term\">166 members (2024)<\/span> on the principle of <span class=\"n-term\">multilateralism<\/span>.<\/li>\n<li><span class=\"n-lab\">Core principles<\/span>: <span class=\"n-term\">MFN<\/span> and <span class=\"n-term\">National Treatment<\/span> \u2014 foreign goods and services treated like domestic.<\/li>\n<li>A binding <span class=\"n-term\">Dispute Settlement System<\/span> is what set it apart from GATT.<\/li>\n<li>Its reach extends beyond goods to <span class=\"n-term\">services (GATS)<\/span> and <span class=\"n-term\">intellectual property (TRIPS)<\/span>.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Cushions for weaker members<\/span><\/p>\n<ul>\n<li>Longer timelines to meet commitments; greater access in <span class=\"n-term\">textiles and services<\/span>.<\/li>\n<li>Anti-dumping and safeguard provisions; technical assistance.<\/li>\n<li><span class=\"n-term\">Maximum flexibility for Least Developed Countries.<\/span><\/li>\n<\/ul>\n<p><span class=\"n-term\">A live fault line \u2014 the \u201cdeveloping country\u201d designation<\/span><\/p>\n<p>The United States has pressed to curb <span class=\"n-term\">self-declaration<\/span>, targeting China. <span class=\"n-term\">China, India and South Africa<\/span> defend self-declaration on <span class=\"n-term\">per-capita<\/span> grounds.<\/p>\n<p><span class=\"n-term\">The two verdicts<\/span><\/p>\n<ul>\n<li><span class=\"n-sch\">Robert Gilpin<\/span> (<em>Global Political Economy<\/em>): credits the WTO with a rules-based regime that lends trade predictability and discourages trade wars.<\/li>\n<li><span class=\"n-sch\">Joseph Stiglitz<\/span> (<em>Globalisation and Its Discontents<\/em>): it advances liberalisation without equity \u2014 its intellectual-property regime favours developed economies.<\/li>\n<\/ul>\n<h3 id=\"dispute-settlement-and-the-appellate-body-crisis\">Dispute settlement and the Appellate Body crisis<\/h3>\n<ul>\n<li>The WTO\u2019s judicial core: a <span class=\"n-term\">binding, two-tier system<\/span> \u2014 ad hoc panels, with appeal to a standing <span class=\"n-term\">Appellate Body of seven members<\/span> (a minimum of three to rule). It gave smaller economies protection against raw power.<\/li>\n<li><span class=\"n-term\">The United States, once its chief promoter, paralysed it.<\/span> It accused the Body of straying from the <span class=\"n-term\">Dispute Settlement Understanding<\/span> after several US anti-dumping and countervailing measures were found inconsistent with WTO rules.<\/li>\n<li>Washington <span class=\"n-term\">blocked new appointments from 2017<\/span> and, in <span class=\"n-term\">December 2019, cut off funding<\/span> \u2014 reducing the Body first to a single member, then to none.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The scholarly split<\/span><\/p>\n<ul>\n<li><span class=\"n-sch\">Joseph Weiler<\/span>: a <span class=\"n-term\">legitimacy crisis<\/span> for the multilateral system.<\/li>\n<li><span class=\"n-sch\">D. Ravi Kanth<\/span>: the US obstructed appointments precisely because a working Body blocked its unilateral measures.<\/li>\n<li><span class=\"n-sch\">J.S. Deepak<\/span>: imperfect though it was, the mechanism curbed unfair trade practices and strengthened the rules-based order.<\/li>\n<li><span class=\"n-sch\">Vineet Hegde<\/span>: with rising protectionism, states keep retaliating and raising barriers \u2014 an unbroken spiral.<\/li>\n<\/ul>\n<p><span class=\"n-term\">Where it stands now<\/span><\/p>\n<ul>\n<li>Non-functional since <span class=\"n-term\">December 2019<\/span>. A <span class=\"n-term\">130-member proposal<\/span> to restart appointments has been blocked many dozens of times.<\/li>\n<li>Losing parties now <span class=\"n-term\">\u201cappeal into the void\u201d<\/span> \u2014 over <span class=\"n-term\">thirty disputes<\/span> and counting \u2014 while an <span class=\"n-term\">EU-led interim arbitration arrangement<\/span> covers much of world trade as a stop-gap.<\/li>\n<li>WTO panels found the <span class=\"n-term\">US steel and aluminium tariffs<\/span> inconsistent with the rules; with no appeal to hear them, the findings had no effect.<\/li>\n<li>Consensus among 166 members has stalled reform since the <span class=\"n-term\">2018 agenda under Roberto Azevedo<\/span>.<\/li>\n<li><span class=\"n-sch\">Richard Baldwin<\/span> calls the wider assault a <span class=\"n-term\">\u201cGreat Trade Hack\u201d<\/span> and speaks of a <span class=\"n-term\">\u201creform or die\u201d<\/span> moment. <span class=\"n-sch\">Pascal Lamy<\/span>: the world must <span class=\"n-term\">reform, not bury,<\/span> the WTO.<\/li>\n<li><span class=\"n-lab\">Way forward<\/span>: restore appeals, bar unilateral measures, place development at the centre.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p>The argument is not <span class=\"n-term\">abolition<\/span> but <span class=\"n-term\">authorship<\/span><\/p>\n<p><cite>who writes and enforces the rules.<\/cite><\/p><\/blockquote>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2020 \u00b7 15m<\/span><span class=\"n-pyq-q\">Critically evaluate the role of the United States of America in the World Trade Organization (WTO) dispute settlement mechanism and its implications for the future of the WTO.<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/critically-evaluate-the-role-of-the-united-states-of-america-in-upsc-psir-2020-3404\/\">Answer<\/a><\/div>\n<h3 id=\"decline-of-the-wto\">Decline of the WTO<\/h3>\n<blockquote class=\"n-quote\">\n<p><span class=\"n-term\">The purpose that has been lost<\/span> GATT and the WTO rested on <span class=\"n-term\">interdependence, transparency and predictability<\/span> \u2014 a prosperous, trading world was thought less likely to go to war. Tariffs fell from about <span class=\"n-term\">40% (1947)<\/span> to under <span class=\"n-term\">5% (1993)<\/span>.<\/p>\n<\/blockquote>\n<ul>\n<li><span class=\"n-lab\">Rising protectionism and trade wars<\/span> \u2014 the <span class=\"n-term\">US\u2013China tariff war<\/span> on hundreds of billions of dollars of goods. <span class=\"n-sch\">Dani Rodrik<\/span>: economic nationalism as a backlash against globalisation.<\/li>\n<li><span class=\"n-lab\">Dysfunctional dispute resolution<\/span> \u2014 the blocked Appellate Body. <span class=\"n-sch\">Robert Keohane<\/span>: once the court cannot rule, the incentive to comply erodes.<\/li>\n<li><span class=\"n-lab\">Fragmentation into bilateral and regional blocs<\/span> \u2014 <span class=\"n-term\">CPTPP, RCEP<\/span>. <span class=\"n-sch\">Joseph Stiglitz<\/span>: such deals undermine universal rules.<\/li>\n<li><span class=\"n-lab\">Geopolitical rivalry<\/span> \u2014 <span class=\"n-sch\">John Ikenberry<\/span> ties the strain to the unipolar-to-multipolar transition. Failure to regulate e-commerce, digital trade and climate-linked measures; <span class=\"n-sch\">Susan Strange<\/span> saw this as a slide into irrelevance.<\/li>\n<li><span class=\"n-lab\">Institutional paralysis<\/span> \u2014 consensus among 166 members and weak enforcement leave rulings ignorable; US withdrawal from multilateral commitments and unilateral sanctions (<span class=\"n-term\">Iran, Russia<\/span>) compound it.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The live illustration \u2014 the tariff wars of 2025\u201326<\/span><\/p>\n<ul>\n<li>The <span class=\"n-term\">April 2025 US \u201creciprocal\u201d tariffs<\/span> \u2014 a universal baseline duty plus country-specific rates \u2014 were the sharpest turn to protectionism in decades, likened to the <span class=\"n-term\">Smoot-Hawley Act of 1930<\/span>. India briefly faced among the highest rates.<\/li>\n<li>In <span class=\"n-term\">February 2026<\/span>, the <span class=\"n-term\">US Supreme Court<\/span> held that the emergency-powers statute did not authorise them, forcing a redesign.<\/li>\n<\/ul>\n<p><span class=\"n-lab\">Close on reform, not burial<\/span>: equitable globalisation needs a reformed WTO, not an abandoned one.<\/p>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2024 \u00b7 15m<\/span><span class=\"n-pyq-q\">The return of trade barriers and economic sanctions has diminished the spirit of GATT. In this context, discuss the factors contributing to the decline of the WTO in recent times.<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/the-return-of-trade-barriers-and-economic-sanctions-has-upsc-psir-2024-3407\/\">Answer<\/a><\/div>\n<h3 id=\"the-fisheries-subsidies-deadlock\">The fisheries-subsidies deadlock<\/h3>\n<p><span class=\"n-term\">Why subsidies are the problem<\/span><\/p>\n<ul>\n<li>Governments spend about <span class=\"n-term\">US$35 billion a year<\/span> on fisheries subsidies. <span class=\"n-term\">Fuel subsidies<\/span> make up about <span class=\"n-term\">22%<\/span> and push distant-water fleets into the waters of poorer states.<\/li>\n<li>Stocks at biologically sustainable levels fell from <span class=\"n-term\">90% (1974)<\/span> to <span class=\"n-term\">65.8% (2017)<\/span>.<\/li>\n<li>Over <span class=\"n-term\">three billion people<\/span> rely on fish for about <span class=\"n-term\">20% of their animal protein<\/span> \u2014 a share that reaches half in Bangladesh, Cambodia, Indonesia and Sri Lanka.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The MC12 Agreement \u2014 and what it left open<\/span><\/p>\n<ul>\n<li>The <span class=\"n-term\">Agreement on Fisheries Subsidies<\/span>, adopted at <span class=\"n-term\">MC12 on 17 June 2022<\/span>, was the <span class=\"n-term\">first WTO agreement centred on the environment<\/span>, the <span class=\"n-term\">first SDG target met through a multilateral deal<\/span>, and only the <span class=\"n-term\">second agreement<\/span> reached since the WTO\u2019s creation.<\/li>\n<li>Three pillars \u2014 <span class=\"n-term\">illegal, unreported and unregulated fishing<\/span>; <span class=\"n-term\">overfished stocks<\/span>; the <span class=\"n-term\">high seas<\/span>. It rests on the <span class=\"n-term\">polluter-pays<\/span> principle and <span class=\"n-term\">common but differentiated responsibilities<\/span>.<\/li>\n<li><span class=\"n-lab\">Overcapacity disciplines stay unresolved<\/span> \u2014 the draft is still heavy with bracketed text on fuel and vessel subsidies.<\/li>\n<\/ul>\n<div class=\"n-tw\">\n<table>\n<thead>\n<tr>\n<th>Side<\/th>\n<th>Position<\/th>\n<th>Detail<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span class=\"n-term\">Developed<\/span><\/td>\n<td>Strict limits on capacity-enhancing subsidies<\/td>\n<td>Superior technology and capital. The informal <span class=\"n-term\">\u201cFriends of Fish\u201d<\/span> grouping presses for curbs; <span class=\"n-term\">Japan, South Korea and Chinese Taipei<\/span> question the subsidy\u2013overfishing link.<\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Developing<\/span><\/td>\n<td>Flexibility for small-scale and artisanal fishers<\/td>\n<td>Led by <span class=\"n-term\">India and the Philippines<\/span>. Prohibitions only outside territorial waters; a transition of about <span class=\"n-term\">25 years<\/span> against the developed preference for roughly <span class=\"n-term\">seven<\/span>.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<ul>\n<li><span class=\"n-lab\">India\u2019s stand<\/span>: fuel rebates, motorisation of boats and infrastructure support fall under the targeted list. It seeks flexibility within its <span class=\"n-term\">exclusive economic zone<\/span>, and argues that heavy past subsidisers should carry more of the obligation.<\/li>\n<li><span class=\"n-sch\">Simon Evenett<\/span>: <span class=\"n-term\">Special and Differential Treatment<\/span> is essential for fairness, but a source of prolonged conflict \u2014 developed states fear it dilutes the deal.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p>The deadlock is a genuine conflict of interests, not obstruction: <span class=\"n-term\">ocean sustainability set against the livelihoods of the poorest fishers.<\/span> India\u2019s position \u2014 conservation cannot be financed by the food security of the Global South.<\/p>\n<\/blockquote>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2022 \u00b7 20m<\/span><span class=\"n-pyq-q\">Identify and evaluate the reasons for the deadlock in the WTO negotiations on fisheries between the developing and developed countries.<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/identify-and-evaluate-the-reasons-for-deadlock-in-the-wto-upsc-psir-2022-3406\/\">Answer<\/a><\/div>\n<h3 id=\"india-and-the-wto\">India and the WTO<\/h3>\n<p>Since <span class=\"n-term\">1995<\/span> the WTO has been the forum where India advances trade and development goals against larger economies. <span class=\"n-sch\">Amrita Narlikar<\/span> points to India\u2019s role as a <span class=\"n-term\">Global South leader<\/span> on agricultural subsidies and public stockholding.<\/p>\n<p><span class=\"n-term\">Food security \u2014 the core fight<\/span><\/p>\n<ul>\n<li>India seeks a <span class=\"n-term\">permanent solution<\/span> to protect procurement at <span class=\"n-term\">Minimum Support Price<\/span> for over <span class=\"n-term\">800 million beneficiaries<\/span>, having secured its programmes through the <span class=\"n-term\">Bali Package (2013)<\/span>.<\/li>\n<li>It refuses to dismantle its <span class=\"n-term\">amber-box<\/span> support \u2014 arguing, with <span class=\"n-sch\">Stiglitz<\/span> and <span class=\"n-sch\">Rodrik<\/span>, that developing countries need <span class=\"n-term\">policy space<\/span> within the rules.<\/li>\n<\/ul>\n<p><span class=\"n-term\">India\u2019s positions across the agenda<\/span><\/p>\n<ul>\n<li>Opposes a <span class=\"n-term\">China-led investment-facilitation pact<\/span> as outside the WTO\u2019s mandate.<\/li>\n<li>Presses a <span class=\"n-term\">CBDR<\/span> line on fisheries.<\/li>\n<li>Seeks to <span class=\"n-term\">end the moratorium on customs duties on electronic transmissions<\/span>.<\/li>\n<li>Resists trade linkage with <span class=\"n-term\">labour and the environment<\/span> \u2014 preferring the <span class=\"n-term\">ILO<\/span>, and objecting to the EU\u2019s <span class=\"n-term\">carbon border tax<\/span> and deforestation rules.<\/li>\n<li>Co-sponsored a <span class=\"n-term\">dispute-settlement reform proposal with the EU<\/span>; opposed a <span class=\"n-term\">2018 US move<\/span> to bar \u201cdefaulters\u201d from presiding over WTO bodies.<\/li>\n<li>Defends the body\u2019s <span class=\"n-term\">consensus-driven<\/span> character, calling it an <span class=\"n-term\">\u201cengine for global trade.\u201d<\/span><\/li>\n<\/ul>\n<h3 id=\"the-imf-and-india-conditionality-and-the-arc-since-1991\">The IMF and India \u2014 conditionality and the arc since 1991<\/h3>\n<ul>\n<li>India drew IMF support during the <span class=\"n-term\">1991 balance-of-payments crisis<\/span>, which triggered liberalisation shaped by the <span class=\"n-term\">Washington Consensus<\/span> (<span class=\"n-sch\">John Williamson<\/span>): <span class=\"n-term\">liberalisation, privatisation, globalisation<\/span>.<\/li>\n<li><span class=\"n-sch\">Joseph Stiglitz<\/span> faults the Fund\u2019s <span class=\"n-term\">blanket loan conditions<\/span> for imposing austerity that raises suffering; <span class=\"n-sch\">Erik Reinert<\/span> for privileging fiscal balance over growth.<\/li>\n<li>The pattern is visible in the <span class=\"n-term\">Sri Lankan crisis (2022)<\/span> and the <span class=\"n-term\">Pakistani bailout (2023)<\/span>, where loan conditions brought welfare cuts and protests.<\/li>\n<li><span class=\"n-sch\">Susan Strange<\/span>: the Fund is a mechanism of <span class=\"n-term\">discipline rather than development<\/span>.<\/li>\n<li>India has moved from <span class=\"n-term\">aid recipient toward aid provider<\/span>. <span class=\"n-sch\">Rakesh Mohan<\/span> and <span class=\"n-sch\">Devesh Kapur<\/span> place it at the front of efforts to reform IMF governance.<\/li>\n<\/ul>\n<h3 id=\"rising-powers-and-the-reform-of-the-bretton-woods-twins\">Rising powers and the reform of the Bretton Woods twins<\/h3>\n<p>The two institutions were built for the world of <span class=\"n-term\">1944<\/span>. The arithmetic still shows it.<\/p>\n<ul>\n<li><span class=\"n-lab\">Voting in the IMF is quota-based<\/span>: the United States holds about <span class=\"n-term\">16.5%<\/span> of votes and an effective veto, since major decisions need an <span class=\"n-term\">85% majority<\/span>.<\/li>\n<li>By a standing <span class=\"n-term\">\u201cgentleman\u2019s agreement,\u201d<\/span> the Managing Director is a European and the World Bank President an American. On the Board of Governors the <span class=\"n-term\">G7 hold a combined ~43%<\/span>.<\/li>\n<li>The <span class=\"n-term\">BRICS<\/span> \u2014 nearly half the world\u2019s population, about a fifth of output \u2014 historically held only around <span class=\"n-term\">11%<\/span> of votes.<\/li>\n<\/ul>\n<p><span class=\"n-term\">How the rising powers are pushing back<\/span><\/p>\n<ul>\n<li><span class=\"n-lab\">Quota reform<\/span>: the <span class=\"n-term\">2010 package<\/span> moved India from <span class=\"n-term\">2.3% to 2.6%<\/span> and China from <span class=\"n-term\">3.8% to 6%<\/span>, transferring about <span class=\"n-term\">6% of quota<\/span> to emerging economies and doubling the Fund\u2019s permanent resources. Rising powers also seek to move some <span class=\"n-term\">two dozen IMF board seats<\/span> from Europe to the developing world.<\/li>\n<li><span class=\"n-lab\">Alternative institutions<\/span>: the <span class=\"n-term\">Asian Infrastructure Investment Bank<\/span>, the <span class=\"n-term\">BRICS New Development Bank<\/span> and the <span class=\"n-term\">Contingent Reserve Arrangement<\/span> \u2014 South\u2013South finance without harsh conditionality. China is now a top contributor and presses to loosen the dollar\u2019s reserve role.<\/li>\n<li><span class=\"n-lab\">The theory shifts with it<\/span>: from <span class=\"n-term\">hegemonic stability theory<\/span> (<span class=\"n-sch\">Charles Kindleberger<\/span>, <span class=\"n-sch\">Joseph Nye<\/span>) toward the <span class=\"n-term\">cobweb model<\/span> (<span class=\"n-sch\">John Burton<\/span>) and <span class=\"n-term\">complex interdependence<\/span> (<span class=\"n-sch\">Robert Keohane<\/span> and <span class=\"n-sch\">Joseph Nye<\/span>).<\/li>\n<\/ul>\n<p><span class=\"n-term\">Where reform actually stands<\/span><\/p>\n<ul>\n<li>The <span class=\"n-term\">16th General Review of Quotas<\/span> raised the Fund\u2019s resources by half but <span class=\"n-term\">left voting shares unchanged<\/span>, keeping the US veto intact; realignment is deferred to the next review.<\/li>\n<li>The three pillars survived 2008 \u2014 its chief institutional fruit was the <span class=\"n-term\">Financial Stability Board (April 2009)<\/span>, from the G20 London summit.<\/li>\n<li><span class=\"n-term\">Mia Mottley\u2019s Bridgetown Initiative<\/span> and <span class=\"n-sch\">Nicholas Stern<\/span> demand that <span class=\"n-term\">climate vulnerability<\/span> count in development lending. India\u2019s <span class=\"n-term\">G20 presidency (2023)<\/span> placed institutional reform at the centre.<\/li>\n<li><span class=\"n-sch\">Thomas Weiss<\/span>: incremental reform is insufficient when the architecture itself is obsolete.<\/li>\n<\/ul>\n<blockquote class=\"n-quote\">\n<p><span class=\"n-term\">The verdict<\/span> The machinery is real and so are its asymmetries. Rising powers are moving from <span class=\"n-term\">norm-takers to norm-shapers<\/span>, but entrenched Western control and the risk of fragmentation cap how far the challenge reshapes the order<\/p>\n<p><cite>reform proceeds by increments, not rupture.<\/cite><\/p><\/blockquote>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2019 \u00b7 20m<\/span><span class=\"n-pyq-q\">How are the rising powers challenging the USA and Western dominance in the IMF and the World Bank?<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/how-are-the-rising-powers-challenging-the-usa-and-western-upsc-psir-2019-3403\/\">Answer<\/a><\/div>\n<h3 id=\"criticism-and-the-legitimacy-crisis\">Criticism and the legitimacy crisis<\/h3>\n<p><span class=\"n-term\">The structural critique<\/span><\/p>\n<ul>\n<li><span class=\"n-sch\">Susan Strange<\/span>: a <span class=\"n-term\">structural bias<\/span> toward developed nations.<\/li>\n<li><span class=\"n-sch\">Martin Khor<\/span>: the institutions are a <span class=\"n-term\">\u201crich man\u2019s club.\u201d<\/span><\/li>\n<li><span class=\"n-sch\">Joseph Stiglitz<\/span>: they have become <span class=\"n-term\">\u201cpart of the problem rather than the solution.\u201d<\/span><\/li>\n<li><span class=\"n-sch\">Robert Cox<\/span>: institutions are never neutral.<\/li>\n<li><span class=\"n-sch\">Noam Chomsky<\/span>: tools of transnational capital \u2014 echoing the Latin American structuralists on the <span class=\"n-term\">\u201cdevelopment of underdevelopment.\u201d<\/span><\/li>\n<li><span class=\"n-sch\">Amrita Narlikar<\/span>: multilateralism cannot survive on <span class=\"n-term\">exclusionary foundations<\/span>.<\/li>\n<\/ul>\n<p><span class=\"n-term\">The reform reading<\/span><\/p>\n<ul>\n<li><span class=\"n-sch\">Ngaire Woods<\/span>: a changing development paradigm.<\/li>\n<li><span class=\"n-sch\">Amrita Narlikar<\/span>: assertiveness read as a quest for recognition.<\/li>\n<li><span class=\"n-sch\">Oliver Stuenkel<\/span>: the new banks are a pragmatic reshaping.<\/li>\n<li><span class=\"n-sch\">Miles Kahler<\/span>: absent reform of IMF and World Bank governance, rising powers become <span class=\"n-term\">\u201cresponsible stakeholders\u201d<\/span> or build <span class=\"n-term\">parallel institutions<\/span>.<\/li>\n<li><span class=\"n-sch\">Zhao Gancheng<\/span>: a shift from <span class=\"n-term\">norm compliance to norm creation<\/span>.<\/li>\n<\/ul>\n<div class=\"n-pyq\"><span class=\"n-pyq-chip\">UPSC 2016 \u00b7 20m<\/span><span class=\"n-pyq-q\">\u201cThe IMF, World Bank, G-7, GATT and other structures are designed to serve the interests of TNCs, banks and investment firms in a \u2018new imperial age\u2019.\u201d Substantiate with examples of the governance of the new world order.<\/span><a class=\"n-pyq-a\" href=\"\/psir\/psir-pyq\/the-imf-world-bank-g-7-gatt-and-other-structures-are-designed-to-upsc-psir-2016-3402\/\">Answer<\/a><\/div>\n<h3 id=\"reforming-the-bretton-woods-system-three-models\">Reforming the Bretton Woods system \u2014 three models<\/h3>\n<p>Financial and economic crises have grown more frequent and severe since the 1980s, generating competing models of reform.<\/p>\n<div class=\"n-tw\">\n<table>\n<thead>\n<tr>\n<th>School<\/th>\n<th>Position<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><span class=\"n-term\">Market fundamentalists<\/span><\/td>\n<td>Do little. Crises are a small price for decades of growth, and more regulation would only worsen matters.<\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Regulatory liberals<\/span><\/td>\n<td>Drawing on Keynesian insights about market fallibility: specific reforms of the global financial architecture and new domestic regulatory regimes. <span class=\"n-term\">Held (1995)<\/span> argued a new architecture must be more inclusive and oriented around <span class=\"n-term\">cosmopolitan democracy<\/span>.<\/td>\n<\/tr>\n<tr>\n<td><span class=\"n-term\">Anti-capitalists<\/span><\/td>\n<td>The 2007\u201309 crisis reflected the imbalances of the global economy itself \u2014 a substantial redistribution of wealth and power is required (<span class=\"n-term\">Monbiot, 2004<\/span>).<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<ul>\n<li><span class=\"n-lab\">What actually happened<\/span>: the three pillars survived. Voting rights adjusted modestly toward developing countries, but fundamental power balances remained. The main institutional change was the <span class=\"n-term\">Financial Stability Board (2009)<\/span>; emerging economies also built the <span class=\"n-term\">AIIB, NDB and BRICS CRA<\/span>, with China calling to replace the dollar as reserve currency.<\/li>\n<li><span class=\"n-sch\">Miles Kahler<\/span>: absent reform of IMF and World Bank governance, rising powers could either become <span class=\"n-term\">\u201cresponsible stakeholders\u201d<\/span> or build <span class=\"n-term\">parallel institutions<\/span>.<\/li>\n<\/ul>\n<div class=\"n-next\"><span><\/span><a class=\"r\" href=\"\/psir\/notes\/socialist-economies-and-the-cmea\/\"><em>Next<\/em><b>Socialist economies and the CMEA<\/b><\/a><\/div>\n<p><\/main><\/p>\n<aside class=\"n-rail\">\n<h4>On this page<\/h4>\n<p><a href=\"#bretton-woods-1944-the-conference-and-its-logic\">Bretton Woods, 1944 \u2014 the conference and its logic<\/a><a href=\"#keynes-and-white-the-contest-that-set-the-design\">Keynes and White \u2014 the contest that set the design<\/a><a href=\"#the-imf-and-the-world-bank-mandate-compared\">The IMF and the World Bank \u2014 mandate compared<\/a><a href=\"#achievements-and-the-collapse-of-the-system\">Achievements \u2014 and the collapse of the system<\/a><a href=\"#from-gatt-to-the-wto\">From GATT to the WTO<\/a><a href=\"#the-wto-principles-safeguards-and-the-two-verdicts\">The WTO \u2014 principles, safeguards, and the two verdicts<\/a><a href=\"#dispute-settlement-and-the-appellate-body-crisis\">Dispute settlement and the Appellate Body crisis<\/a><a href=\"#decline-of-the-wto\">Decline of the WTO<\/a><a href=\"#the-fisheries-subsidies-deadlock\">The fisheries-subsidies deadlock<\/a><a href=\"#india-and-the-wto\">India and the WTO<\/a><a href=\"#the-imf-and-india-conditionality-and-the-arc-since-1991\">The IMF and India \u2014 conditionality and the arc since 1991<\/a><a href=\"#rising-powers-and-the-reform-of-the-bretton-woods-twins\">Rising powers and the reform of the Bretton Woods twins<\/a><a href=\"#criticism-and-the-legitimacy-crisis\">Criticism and the legitimacy crisis<\/a><a href=\"#reforming-the-bretton-woods-system-three-models\">Reforming the Bretton Woods system \u2014 three models<\/a><\/aside>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>From Bretton Woods to WTO for the UPSC PSIR optional \u2014 PSIR Notes \u203a II-A Comparative Political Analysis and International Politics \u203a From Bretton Woods to WTO Paper I \u00b7 Comparative<\/p>\n","protected":false},"template":"","meta":{"jetpack_post_was_ever_published":false,"fx_note_key":"II-A.8.1","fx_note_sec":"II-A","fx_note_point":"8","fx_note_desc":"From Bretton Woods to WTO for the UPSC PSIR optional \u2014 PSIR Notes \u203a II-A Comparative Political Analysis and International Politics \u203a From Bretton Woods to WTO Paper I \u00b7 Comparative","footnotes":""},"class_list":["post-3559","psir_note","type-psir_note","status-publish","hentry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note"}],"about":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/types\/psir_note"}],"version-history":[{"count":2,"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3559\/revisions"}],"predecessor-version":[{"id":3812,"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/psir_note\/3559\/revisions\/3812"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/psir\/wp-json\/wp\/v2\/media?parent=3559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}