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Bretton Woods: Impact and Demise
• Liberalization of trade was attempted in the GATT to increase trade, in a bilateral
o Likegroup arrangements (similar regime type, etc.) were established more
according to ideological lines.
• With the GATT, multilateral trade was not established until the fall of the Berlin
Wall, end of Cold War, and establishment of the WTO.
• However, trade barriers DID still exist.
• Created the OECD, which was a forerunner to the EU.
• Trade barriers were still intact within these states (Eastern Bloc), but did not
participate in the GATT – Soviets would not establish a trade union with
Germany, Sweden, etc. Socialist and communist governments had their own trade
agreements in the Warsaw Pact.
• This is an example of a bipolar world – the west and east.
• In practice, free trade was free only as far as the other states were trusted by yours
– in other words, not TOTAL freedom.
• We can evaluate free trade in today’s world in the same way – is trade free
between absolutely everyone? E.g. The US does not trade with North Korea or
Cuba. However, they still advocate with less and less protectionism.
• So while the GATT did not promote multilateral trade, it still promoted increased
• Still today, favoured and notsofavoured trading partners exist.
• The impact of Bretton Woods lasted into the 1970s. After WWII, the aim was not
totally monetary policy anymore. The aim was now to rebuild and increase
productizing – so to discourage protectionist tendencies, as they were thought to
impede recovery. It DID help industrial west to build its political economies. The
compromises made between international integration and national autonomy,