Why the world needs a new Bretton Woods moment

Linda J. Dodson

Trade

Similarly the global trade system is imbalanced, says Torres.

The same emerging markets that cite their size and clout as a reason to gain more authority at the IMF claim the opposite at the WTO, seeking to retain their developing market status that lets them protect markets and coddle industries.

In contrast the rich nations blocking change at the IMF promote it at the WTO, arguing that big emerging markets have unfair exemption from the level playing field on trade.

“The IMF has to accommodate Asia – it cannot remain a North Atlantic organisation and be as effective as we want it to be,” says Torres.

“And the WTO has to accommodate reality – it is totally nuts that countries like China or India or Brazil can go to the WTO and say, ‘I cannot compete on an equal footing so I need special treatment forever’ while not committing to do anything on domestic policies.”

Ideally he would want all of these issues addressed in one go, to ensure all countries are consistent on trade and finance.

“A new Bretton Woods would have to deal with a lot of these problems. As Churchill said, we should not let a good crisis go to waste,” says Torres.

Inequality and the climate

“This crisis must serve as a wake-up call and a call to action for business and government to think, act and invest for the common good and confront the structural obstacles that have inhibited inclusive economic growth for years,” wrote Jamie Dimon, chief executive of JP Morgan in his most recent update to shareholders.

One such obstacle is the imbalanced trade system that has left industries in rich countries unable to compete with imports from developing economies, leading to inequality and anger at globalisation in the West.

Uncoordinated environmental rules could be on the new Bretton Woods agenda for similar reasons.

Tough rules on emissions in nations such as the UK add significantly to manufacturers’ costs. It means they struggle to compete with dirtier production elsewhere in the world.

Imported goods win out, destroying domestic industry while failing to have any impact on the global emissions that matter for climate change.

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