The Purpose Of The Reciprocal Trade Agreement

Due to the Great Depression, tariffs reached historic heights. Members of Congress have generally entered into informal quid-pro-quo agreements, in which they voted in favour of other members` preferential tariffs in order to gain the support of their members. No one took into account the overall toll for U.S. consumers or exporters. This practice is commonly referred to as logrolling. Roosevelt and key members of his government made sure to put an end to the practice. [19] Between 1934 and 1947, the United States entered into separate trade agreements with 29 foreign countries. The Customs Commission found that U.S. tariffs were reduced from an average of 48% to 25% on average over the 13-year period when it used duty-subject imports in 1939 as a basis for comparison. 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.

RTAA`s innovative approach freed Roosevelt and Congress from breaking this trend of tariff increases. It has linked U.S. tariff reductions to reciprocal tariff reductions with international partners. It also allowed Congress to approve tariffs by a simple majority, unlike the two-thirds majority needed for other contracts. In addition, the President had the power to negotiate the terms. The three innovations in trade policy have created the political will and feasibility of a more liberal trade policy. [3] Eighty years later, the tradition of the Mutual Trade Agreements Act continues in the form of the modern Trade Promotion Authority (TPA). Like President Roosevelt, President Obama has made trade policy a central part of his economic strategy to create jobs, stimulate growth and strengthen the middle class. In 2013, U.S.

exports reached a record $2.3 trillion, an increase that accounts for one-third of total U.S. economic growth. In addition, each additional $1 billion in exports supported approximately 5,600 jobs in the United States, which cost an average of 13-18% more than non-export-related jobs. The Trade Promotion Authority is necessary to build on these achievements and extend U.S. economic leadership to the 21st century. President Franklin D. Roosevelt signed the Reciprocal Trade Agreements Act (RTAA) in 1934. It gave the president the power to negotiate bilateral and reciprocal trade agreements with other countries and allowed Roosevelt to liberalize U.S. trade policy around the world.

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