Purpose Of Reciprocal Trade Agreements

Although Congress has entrusted the Ministry of Foreign Affairs with primary responsibility for negotiations with other nations, it has instructed the Customs Commission and other government authorities to participate in the development of a list of concessions that could be made or requested from foreign countries in exchange. Any trade agreement should adopt the principle of „unconditional treatment of the most favoured nation“ and allow for a reduction in import duties of up to 50% of the Smoot-Hawley level. 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. The Trade Promotion Authority aims to create opportunities for domestic workers, just as Roosevelt`s RTAA supported job creation on the national territory through trade in New Deal programs. The TPA is an important element of trade negotiations because it allows Congress to define the terms of trade negotiations, consultations at Congress during negotiations and legislative procedures for voting on agreements. Today is the 80th anniversary of the Reciprocal Trade Agreements Act (RTAA), a new approach to trade policy adopted by the New Deal Congress and signed by President Franklin D. Roosevelt. RTAA was the first time that Congress and a president worked together to give trade bargaining powers, to help pass new trade agreements that would increase exports and encourage job creation. Through the RTAA, Congress defined the framework for international trade negotiations and authorized the President to play a U.S.

leadership role in the international trading system. 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] The Reciprocal Trade Agreements Act was signed on June 12, 1934 as part of the Roosevelt administration`s efforts to pull America out of the Great Depression. RTAA has been an integral step in the U.S.

transition from economic crisis to global leadership. The FDR considered that a full and sustainable recovery depended on strengthening international trade to increase domestic growth and demand. To ensure our country`s place in the global economy, the U.S. President and Congress had to work together to negotiate trade agreements, reduce tariffs on goods and increase U.S. exports. Strengthening international trade fostered the growth aspects of the New Deal`s domestic programs, and the successful implementation of the RTAA resulted in the conclusion of 19 new trade agreements between 1934 and 1939, strong growth in U.S. exports and a recovery of the U.S. economy. 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.