This chapter presents a fleeting history of key changes in global trade and finance in the post-war period, organised around the themes of crisis and cooperation. The first section of the chapter discusses the key themes. The second section considers the emergence of the post-World War II Bretton Woods regime. The third section outlines the rise of private capital in the 1970s through to the debt crisis of the 1980s. The fourth section considers discussions of global financial architecture in the 1990s to the 2000s. The fifth section discusses changes in the last fifteen years, focusing on how the trade regime has stalled and the financial regime has been partially rolled back. Finally, the concluding section reflects on the ever-present need to foster cooperation in the global financial and trade architecture.

Introduction

This chapter presents a fleeting history of key changes in global trade and finance in the post-war period, organised around the themes of crisis and cooperation. The first section of the chapter discusses the key themes; the second section considers the emergence of the post-World War II Bretton Woods regime; the third section outlines the rise of private capital in the 1970s; the fourth section traces the impact of the Debt Crisis of the 1980s; the fifth section considers discussions of global financial architecture in the 1990s and the early 2000s; and the sixth section discusses changes from 2004 to 2016, focusing on how the trade regime has stalled and the financial regime has partly been rolled back. Finally, the concluding section reflects on what changes in the US administration and the reassertion of economic nationalism might mean for global trade and finance. Key terms relating to global trade and finance are explained in Box 26.1.

Who is afraid of the global economic system?

Calls for the study of global trade and finance were initially based on fears that the collapse of the Bretton Woods system (discussed below) gave market actors the upper hand over states, and that the states needed to cooperate to avoid tariffs and encourage economic growth. Without cooperation on trade and finance, the world economy would be prone to frequent and severe economic crises, reinforcing trade wars, agitating actual military conflicts and creating a drain on the established welfare systems in advanced industrial economies. Such a failure would also hinder economic growth and statebuilding in developing economies, deepening their structural economic dependence on the West.

Within International Relations (IR), the study of global trade and finance in international relations has developed a broad range of research questions and analytical perspectives. The sub-field of International Political Economy typically considers two key themes: (1) crisis – why the contemporary world economy is prone to international economic crises; and (2) cooperation – how to combat crises and enhance cooperation through the creation of a better designed regimes, especially through international organisations. The most common aspect of both themes is the role of the United States as the ‘hegemon’ within global trade and financial regimes, as it respectively propagates crises in trade and finance in reaction to domestic pressures, and seeks to dominate formal decision-making in trade and finance regimes.

Foreign policy and international politics are often conceived of as separate from, or even above, domestic politics. This book has challenged that view by noting the links between the domestic and international spheres (see Chapter 6). This chapter rounds off the exercise by considering the international and domestic influences on Australia’s foreign policies. In addition to broad international factors, the chapter discusses the roles of domestic political institutions and the political behaviour of key individuals and groups in shaping Australian foreign policies (see Chapters 2 and 3). Critical theorists would, of course, point to the huge structural socio-economic differences between, say, China and Samoa as a key factor in Australia’s different interactions with each (see Chapter 4), while discourse theorists would argue that some international issues become recognised and others obscured via the discourses of ‘threat’, ‘security’, ‘cooperation’, and so on. This chapter also links back to Chapter 1. Both chapters suggest the difficulty of holding on to nationally bounded meanings of ‘the people’ and ‘democracy’ in a world that is increasingly connected.

Introduction

This chapter examines both the concepts and the structures of the global trading regime before considering the ensuing debates. First, it explains the international free trade regime and the opportunities it affords. Second, it identifies some of the problems that have beset this system. Third, it notes the growth in preferential trade agreements. Fourth, it considers the prospects for reform of the global trading system; and fifth, it examines the impact of the Global Financial Crisis on global trade, before examining the prospects for recovery. Key terms relating to global trade are explained in Box 25.1.

The global trade regime has been variously praised as providing the engine for global growth and critiqued for exploiting weaker players in the international system. The intense protests at the World Trade Organization (WTO) Millennium Round’s Third Ministerial Meeting in Seattle in November and December 1999 were a dramatic illustration of the disputes being fought over the operation of the world trading regime. These public battles reflected both intellectual and policy concerns surrounding the nature of global trade. In particular, this major dispute reveals a broad coalescence of dissatisfaction with the liberal international economic order that was established immediately after World War II. Born after a period of devastation wrought through two world wars and the Great Depression, the new economic order attempted to remove barriers to trade, promote prosperity and thereby prevent a repeat of past tragedies. The emergent system sponsored by the US aimed to implement a liberal trading regime that both espoused and practised free and open trade. Part of the post-war reconstruction process involved countries profiting from access to markets and removal of barriers to capital movement. Towards the latter half of the twentieth century this process was given greater impetus through rapid developments in transportation and communication. Market internationalisation increased significantly and countries became increasingly interdependent. In short, international trade and prosperity expanded enormously during this period.

Introduction

This chapter examines both the concepts and structures of the global trading regime before considering the ensuing debates. It also provides an analysis of Australia's place in the global trading regime. First, it outlines the international free trade regime. Second, it identifies some of the problems that have beset this system. Third, it notes the growth in preferential trade agreements. Fourth, it examines Australia's historical place in global trade before, finally, surveying more recent trends in Australia's global trade.

Recall the intense protests at the World Trade Organization (WTO) Millennium Round's Third Ministerial Meeting in Seattle, November and December 1999. Here we witnessed a dramatic illustration of the disputes being fought over the operation of the world trading regime. These public battles reflected both intellectual and policy concerns surrounding the nature of global trade. In particular, this major dispute reveals a broad coalescence of dissatisfaction with the liberal international economic order that was established immediately after World War II. Born after a period of devastation wrought through two world wars and the Great Depression, the new economic order attempted to remove barriers to trade and thereby prevent a repeat of past tragedies. The emergent system sponsored by the US aimed to implement a liberal trading regime that both espoused and practised free and open trade. Part of the post-war reconstruction process involved countries profiting from access to markets and removal of barriers to capital movement.