Significance Of Reciprocal Trade Agreement

Democrats voted much more in favor of trade liberalization than Republicans, but were not consistent in their preferences. Mp Henry Rainey (D-IL) and members of Roosevelt`s government, Rexford Tugwell, Raymond Moley and Adolf Berle, were skeptical of tariff reductions during the Depression. However, the government decided to use a Democratic-controlled congress and presidency to impose the RTAA. In 1936 and 1940, the Republican Party ran on a platform to lift tariff reductions guaranteed under the RTAA. But when they reclaimed Congress in 1946, they did not act to remove tariffs. In the years since the adoption of the RTAA in 1934, the economies of Europe and East Asia had been decimated by the violence of World War II, which left a huge global production gap filled by American exporters. [2] During the war, the United States had the highest positive balance in its history. Republican preferences for tariffs began to shift as exporters in the home districts began to benefit from stronger international trade. In the 1950s, there was no statistically significant difference between Republicans and Democrats on customs policy, a change that has lasted ever since. [3] The RTAA was regularly renewed by Congress until it was replaced in 1962 by the Trade Expansion Act, which President John F. Kennedy wanted to give it broader power to negotiate reciprocal trade agreements with the European Common Market.

The Common Market was created in 1957 to remove all trade barriers in six major Western European countries: France, West Germany, Italy, Belgium, the Netherlands and Luxembourg. Their economic strength, increasing pressure on the U.S. balance of payments and the threat of a communist aid and trade offensive prompted Congress to pass the Trade Expansion Act. While the United States had negotiated in the past on a point-by-point basis, the president could in the future decide to reduce tariffs for an industry or an extended base for all products. , in exchange for similar cuts from other countries. To address the tariff problems created by the common market, the President was allowed to reduce tariffs on industrial products by more than 50 per cent or to eliminate them altogether if the United States and the common market together accounted for 80% or more of the global value of exports. Although the world has changed dramatically since the FDR passed the Mutual Trade Agreements Act, the basic trade promise remains the same. Well done, trade policy gives American workers the chance to compete in a level playing field, and under the TPA, Congress and the government unite to manage trade with global partners by setting goals and standards that defend American interests and values.

Under the leadership of the United States and the United Kingdom, international cooperation has flourished and concrete institutions have been created. The discussions that began at the Bretton Woods Conference of 1944 were the International Monetary Fund. The first international trade agreement, the General Agreement on Tariffs and Trade (GATT), was established in 1949. In 1994, THE GATT was replaced by the World Trade Organization (WTO), which still controls international trade agreements. [20] [21] Secretary Hull`s first efforts were to reach reciprocal trade agreements with Latin American countries, a region considered crucial to U.S. trade and security, where rival powers (particularly Germany) have gained ground at the expense of American exporters.