The Ghost of Bretton Woods: A World Trade Organization Crisis

In the sunset hours of World War II, the international economy was understandably in dire straits. By 1944, world leaders such as President Franklin D. Roosevelt soon realized the isolationist policies– decreased military intervention, high tariffs, and an inward focus on domestic issues– implemented to ameliorate the Great Depression crisis ultimately contributed to an unstable international economy. While Allied forces planned to land in Normandy for an attack that would eventually lead to the downfall of Axis belligerents, delegates from 44 nations met in Bretton Woods to consider a system of economic cooperation, culminating in the establishment of the World Trade Organization (WTO) in 1995. Today, less than a century later, the same institution born from the post-WWII vision of integrated trade faces an existential crisis. As countries continue to implement protectionism policies and bypass multilateral trade rules in favor of unilateral action, the WTO must either reassert its authority in international trade or risk becoming obsolete. 

The Bretton Woods Conference successfully institutionalized the International Monetary Fund (IMF) and the World Bank, and yet its ambitious goals remain a contentious topic for many nations in the future. In 1947, however, most delegates recognized the necessity of an international organization to facilitate financial stability and ensure international trade cooperation, leading to the establishment of the General Agreement on Tariffs and Trade (GATT). Its provisional framework, however, was merely a temporary placeholder for the establishment of the WTO in 1995. Envisioned as a venerated institution that would govern international trade for future generations, the WTO revolutionized international trade, unlike its predecessor. Not only did the institution (1) create new procedures for the settlement of disputes, but it also (2) expanded the scope of the member states, representing nearly 98% of all global trade nations. In many ways, the WTO’s creation accomplished an unrealized goal of the Bretton Woods system: international economic cooperation and compromise. Indeed, the World Trade Organization remained at the forefront of the international effort to maintain a structured and equitable trading system throughout the early 2000s. 

Modern divisive nationalist policies, however, inhibit the effectiveness of the WTO in facilitating global trade, ultimately threatening its authority and relevance. Foremost among these is the resurgence of protectionist policies, particularly reflected in the escalating trade tensions between the United States and China. In early February 2025, newly re-elected President Donald Trump imposed an additional 10% tariff on all Chinese exports, further intensifying an ongoing trade war between Western and Asian countries. At the following WTO meeting, China condemned these swift tariffs, claiming the “U.S.’s unilateral tariff increase seriously violates the rules of the World Trade Organization,” further asserting that such measures could destabilize global supply chains and merit broader economic repercussions. 

Beyond trade wars, the WTO has struggled to enforce its own rulings, exposing its lack of authority on a global scale. The organization’s dispute settlement system has been severely weakened by the ongoing paralysis of its Appellate Body. Outside of internationally accepted regulations and arbitration, the WTO’s dispute settlement system process has largely prevented the harmful cycles of tariffs and retaliation for nearly 25 years. As of 2019, however, the United States, apparently fearful of the WTO’s challenge to U.S. sovereignty, has blocked the appointment of new judges to the WTO’s Appellate Body. Such obstructionism inhibits the WTO from facilitating multilateral trade and forces many nations into a state of limbo. Therefore, it comes as no surprise that countries have turned to regional trade agreements, allowing them to negotiate terms without recourse to an effective dispute resolution system. Such agreements risk altering the global trade policy, making it difficult for smaller economies to compete on equal footing and maintain their sovereignty. Consequently, the organization struggles to maintain its credibility and sustain its relevance, with many leading nations sidestepping the WTO policies. 

In response to these challenges, the World Trade Organization has proposed a reform plan meant to buttress the falling organization. With the rising tension between the two leading nations, the United States and China, that threatens to obstruct global supply chains, a significant focus has been placed on reforming the dispute settlement system to enhance its accessibility, effectiveness, and credibility. Many WTO members suggest stronger, streamlined procedures and timely appointments to the Appellate Body, effectively preventing previous obstructionist policies from recurring. Additionally, there has been a concerted effort to implement transparency and compliance among WTO member nations by enforcing notification obligations: “a transparency obligation requiring member governments to report trade measures to the relevant WTO body…”. This initiative will ensure that nations are held accountable and that trade policies are transparent, fostering a predictable trade environment. Moreover, the 21st century has witnessed a dramatic transformation of the WTO as digital commerce expands and intellectual property concerns grow. By such means, the WTO faces external pressures to modernize trade regulations and update its agreements.

Despite such reforms, the lingering question remains whether these efforts are sufficient to revitalize the institution. Under the new presidential administration, the impetus for reform has intensified, amplifying the need to solidify the WTO’s leading position in the international economy. If such developments have not caused enough reason for concern and decisive solutions, the modern international economy risks regressing to the hostile period prior to the end of World War II. Yet, despite its shortcomings, the World Trade Organization remains one of the few institutions capable of ensuring multilateral cooperation. 

The international trade economy, refined and proposed during the 1944 Bretton Woods Conference, contributes to global efficiency, greater productivity, faster growth, and economic interdependence. The WTO, as a successor to GATT, provided an institution meant to prevent protectionism; however, as trade wars escalate developing tensions, a call for greater equity in global commerce is needed. Without significant reform, trade tensions will not abate. Still, the institution’s presence reflects the necessity of a global trade arbiter. While the original Bretton Woods vision of economic cooperation remains as relevant today as it was in 1944, its survival depends on nations' willingness to adapt to an interconnected modern society while preserving the basic principles of cooperative trade.