Restrictive tariffs imposed by countries desperate to protect themselves — including the U.S. Smoot-Hawley Tariff Act of 1930 — had only exacerbated the problem, and Roosevelt wanted to remove Congress` hard hand from trade policy. In the same message to Congress, the president said: “If American agricultural and industrial interests are to retain their deserved place in this [international] trade, the US government must be able to negotiate with other governments for this place through swift and determined negotiations based on a carefully considered agenda”[4]. During World War II, the State Department and other government agencies worked on plans to rebuild global trade and payments. They discovered significant gaps in the trade agreement agenda and concluded that they could make better progress through simultaneous multilateral negotiations. After the war, President Harry S. Truman used the RTAA to authorize the United States to join twenty-three different countries conducting bilateral tariff negotiations on a product-by-product basis, with each country negotiating its concessions for each imported product with the main supplier of that product. The various bilateral agreements were combined into the General Agreement on Tariffs and Trade (GATT), which was signed in Geneva on 30 October 1947. In the last “Uruguay Round” (1986-1994), GATT created its own successor, the World Trade Organization (WTO), which established the basic rules to replace bilateral agreements with a multilateral trading system between more than 140 member states. The WTO has gone beyond efforts to reduce tariffs to promote trade liberalization in areas such as global information technology and financial services. The WTO Secretariat is based in Geneva, but decisions are taken by consensus among Member States at semi-annual ministerial conferences. Because of the benefits of membership, even former communist countries, including Russia and China, tried to join.

The first reason for the RTAA was to help America emerge from the Great Depression, which had severely limited the volume of international trade. In its message to Congress advocating for the bill, FDR pointed out that “the nation`s exports in 1933 represented only 52% of the volume of 1929 and 32% of the value of 1929” [3]. Between 1934 and 1939, the Roosevelt administration concluded trade agreements with 19 countries under the Reciprocal Trade Agreements Act: Belgium, Brazil, Canada, Colombia, Costa Rica, Cuba, Czechoslovakia, Ecuador, El Salvador, Finland, France, Guatemala, Haiti, Honduras, the Netherlands, Nicaragua, Sweden, Switzerland, and the United Kingdom. After 1945, the tariff negotiation procedure introduced under the RTAA program served as a model for the General Agreement on Tariffs and Trade (GATT), the agreement signed by 23 countries in 1947 that provided the framework for multilateral trade liberalization in the post-World War II period. The U.S. State Department also found good use of the expansion of free trade after World War II. Many in the State Department viewed multilateral trade agreements as a way to engage the world in accordance with the Marshall Plan and the Monroe Doctrine. U.S. trade policy has become an integral part of U.S. foreign policy. This quest for free trade as diplomacy intensified during the Cold War, when the United States competed with the Soviet Union for relations around the world. [20] When President Franklin Delano Roosevelt took office in March 1933, he immediately became interested in the domestic economic situation created by the Great Depression.

Believing that the recovery would come from measures at home rather than abroad, he secured the passage of a series of sweeping domestic economic reforms by Congress that would become known as the first New Deal. His doubts about the ability of foreign economic policy to contribute to domestic recovery were reflected in his approach to the London Economic Conference. In June 1933, representatives of 66 countries met in London to try to find a way out of the depression through cooperation in areas such as the removal of trade barriers and the stabilization of exchange rates. Countries that remained on the gold standard, such as the France, tried to convince countries that had left the gold standard, especially the United Kingdom (in September 1931) and the United States (in April 1933), to agree on stabilizing the nominal value of their currencies. The chances of success were already slim when Roosevelt on July 3 dismissed such an agreement as “a purely artificial and temporary experiment,” claiming that a “healthy internal economic situation” was more important to a country`s prosperity than the external value of its currency. The conference ended less than a month later with little evidence of their efforts. The RTAA, which was updated intermittently until 1961, is a multilateral trade negotiation within the framework of GATT[16] and negotiations with new Member States. [17] While US tariffs have fallen dramatically, global markets have also been increasingly liberalized.

World trade has grown rapidly. The RTAA was a U.S. law, but offered the first widely used system of guidelines for bilateral trade agreements. The United States and European nations began to avoid a “man for himself” policy that pursued domestic trade goals at the expense of other nations. Instead, countries began to see the benefits of trade cooperation. As more U.S. industries benefited from tariff cuts, some of them began pressuring Congress for lower tariffs. Until the RTAA, Congress had been primarily influenced by industries that were trying to create or increase tariffs to protect their industry. This change has also helped to ensure much of the progress in trade liberalization. In short, the political incentive to increase tariffs has decreased and the political incentive to reduce tariffs has increased. [3] If Congress wanted to impose a lower tariff on certain imports before the RTAA, it would act unilaterally and attack the rate of duty set by the foreign country. Congress would choose a tariff rate slightly higher or lower than the median preferential rate, depending on the composition of Congress.

In general, a Republican-controlled Congress would prefer higher tariffs, and a Democratic-controlled Congress would prefer lower tariffs. Thus, tariffs were chosen on the basis of U.S. domestic policy. Individual members of Congress have come under heavy pressure from industry lobbyists to raise tariffs to protect them from the negative effects of foreign imports. [3] The legislative development of the RTAA and trade policy is complex, but “the tradition of the Reciprocal Trade Agreement Act continues in the form of the modern Trade Promotion Authority (TPA)” [10], a set of laws that provide guidance to the executive branch of Congress for trade purposes [11]. In addition, trade policy has become controversial again. After a long period of tariff cuts and international trade liberalization, higher tariffs and a more protectionist trade policy have become popular again. MUTUAL TRADE AGREEMENTS. To boost U.S.

exports at a time when the global depression had reduced international trade and many countries were raising import tariffs, President Franklin D. Roosevelt`s Secretary of State, Cordell Hull, persuaded Congress to pass the Reciprocal Trade Agreements Act (RTAA). This amendment to the Smoot-Hawley Tariff Act of 1930 gave the president the power to enter into foreign trade agreements with other countries on the basis of a reciprocal tariff reduction. This marked a break with the historic approach of getting Congress to set import tariffs, usually at high protectionist levels. Under the leadership of the United States and the United Kingdom, international cooperation flourished and concrete institutions were created. In the talks that began at the Bretton Woods Conference of 1944, the International Monetary Fund was created. In 1949, the first international trade body, the General Agreement on Tariffs and Trade (GATT), was established. In 1994, GATT was replaced by the World Trade Organization (WTO), which still monitors international trade agreements. [20] [21] Although Congress has given the State Department primary responsibility for negotiating with other nations, it has instructed the Customs Commission and other government agencies to participate in the development of a list of concessions that could be made abroad or demanded of them in return. Any trade deal should include the principle of “most-favoured-nation unconditional treatment” and could allow for a reduction in import tariffs of up to 50% of the Smoot-Hawley level. Regarding the impact of the RTAA, the Office of the U.S.

Trade Representative states, “The increase in international trade fostered the growth-boosting aspects of the National Programs of the New Deal, and the successful adoption of the RTAA led to the conclusion of 19 new trade agreements between 1934 and 1939, a strong growth in the United States. Exports and the recovery of the US economy” [9]. This optimistic view was challenged by at least one researcher who concluded that while the RTAA brought some benefits, other policies and business behaviors limited its effectiveness at the time [8]. The Reciprocal Trade Agreements Act was enacted on June 12, 1934, as part of the Roosevelt administration`s efforts to pull America out of the Great Depression. The RTAA served as an integral step in America`s transition from economic crisis to global leadership. FDR believed that a full and sustainable recovery depended on increased international trade to boost domestic growth and demand. To secure our country`s place in the global economy, the U.S. president and Congress had to work together to negotiate trade deals to reduce tariffs on goods and increase the U.S.