The current architecture for global policy making rests on the Bretton Woods institutions: IMF, World Bank, GATT and now WTO. These institutions were designed for interactions between countries that did not involve the physical linkages that have been growing since the early 1960s from local (pesticides) to global (thinning of the ozone layer) concerns. These externalities are now increasingly transborder. Because States are sovereign, the problem of allocation of property rights to internalize them cannot be solved by adjudication as in the case of national externalities so the confl icts over trade policies and over environmental policies, particularly those on mitigating climate change is refl ecting the relative power of parties involved. Nowhere is this clearer than in the current climate and trade negotiations.