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Response to Erich Bloodaxe BSN (Reply #1)

Thu Apr 23, 2015, 12:23 PM

19. Blame it on FDR and his Reciprocal Tariff Act of 1934 and International Trade Organization in 1944.

Reciprocal Tariff Act of 1934

President Franklin Delano Roosevelt signed the Reciprocal Trade Agreements Act (RTAA) into law in 1934. RTAA gave the president power to negotiate bilateral, reciprocal trade agreements with other countries. This law enabled Roosevelt to liberalize American trade policy around the globe. It is widely credited with ushering in the era of liberal trade policy that persists to this day.

After the Civil War, Democrats were generally the party of trade liberalization, while Republicans were generally for higher tariffs. The RTAA marked a sharp departure from the era of protectionism in the United States. American duties on foreign products declined from an average of 46% in 1934 to 12% by 1962.

The administration decided to take advantage of having a Democratic-controlled Congress and Presidency to push through the RTAA. ... In 1936 and 1940, the Republican Party ran on a platform of repealing the tariff reductions secured under the RTAA.

How RTAA changed the world

As American duties dropped off dramatically, global markets also increasingly liberalized. World trade expanded at a rapid pace. The RTAA, though a law of the United States, provided the first widespread system of guidelines for bilateral trade agreements. The United States and the European nations began avoiding beggar thy neighbour policies (which pursued national trade objectives at the expense of other nations). Instead, countries started to realize the gains from trade cooperation.

http://en.wikipedia.org/wiki/Reciprocal_Tariff_Act

The ITO:

The original intention was to create a third institution to handle the trade side of international economic cooperation, joining the two “Bretton Woods” institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services. The aim was to create the ITO at a UN Conference on Trade and Employment in Havana, Cuba in 1947.

The Havana conference began on 21 November 1947, less than a month after GATT was signed. The ITO Charter was finally agreed in Havana in March 1948, but ratification in some national legislatures proved impossible. The most serious opposition was in the US Congress, even though the US government had been one of the driving forces. In 1950, the United States government announced that it would not seek Congressional ratification of the Havana Charter, and the ITO was effectively dead.

https://www.wto.org/English/thewto_e/whatis_e/tif_e/fact4_e.htm

FDR inherited high tariffs and little trade from the republican trio of Harding, Coolidge and Hoover. If he had left things alone, we would probably not have the 'free trade' we have today. Perhaps we are lucky that republican won back control of congress before US participation in FDR's International Trade Organization came up for approval. republicans, of course, refused to even bring it up for a vote.

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F4lconF16 Apr 2015 OP
Erich Bloodaxe BSN Apr 2015 #1
LineLineReply Blame it on FDR and his Reciprocal Tariff Act of 1934 and International Trade Organization in 1944.
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