US Trade Policy

11 Key excerpts on "US Trade Policy"

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  Applied International Economics

  • W. Charles Sawyer, Richard L. Sprinkle(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  9 , we examined the effects of tariff and nontariff barriers to trade and discussed how protectionism tends to make a country as a whole worse off. However, these effects are not uniform. The gains to consumers tend to be widely dispersed and in many cases hardly noticeable. However, the losses to domestic producers and workers are very concentrated. As a result, some firms and workers might seek protection from the government. In this chapter, we will explain why most countries provide protection to some domestic industries. We begin by analyzing the political economy of protection. Protection from imports may not be in the country’s best interest, but it is in the interest of selected special interest groups. We also explain a country’s structure of protection by describing why the tariff is high for some goods and low for others. Next, we explain what is known as administered protection as it has become difficult for governments to explicitly raise tariffs. These bureaucratic mechanisms have been developed that allow tariffs to be increased in the presence of allegedly unfair foreign competition.

  The second part of the chapter presents the evolution of U.S. trade policy from 1792 to today. The nature and fundamental principles of U.S. trade law are much easier to understand if you know something about its historical roots. The last section of the chapter describes the evolution of the global trading system since World War II. The WTO is the product of nearly fifty years of international trade negotiations. This section discusses the history of those negotiations, the troubled state of world trade negotiations and the issues left to be negotiated. A final section covers the current challenges to the current arrangement of international trade relations.

  THE POLITICAL ECONOMY OF PROTECTIONISM

  Given that a country as a whole gains from trade, one would expect free trade to dominate most countries’ international trade policy. Trade barriers cost the economy more in lost consumer surplus than is gained by producers and the government. However, as we saw in the last two chapters, firms and workers in import-competing industries gain from trade barriers. As we will see in what follows, the interaction between the gains from trade for the country and the gains from trade barriers for producers explains the existence of trade barriers. The result is that free trade is not most countries’ international trade policy.

  In economics, policy refers to an action or actions that a government implements. For example, governments regulate industries and firms in a number of areas. These regulations are designed to modify economic activity in some way. In the presence of market failures, government regulation can improve the welfare of society. Such regulations are commonly observed for pollution or in the food and pharmaceutical industries. Not all government regulation of industries and firms works to the benefit of society as a whole; some regulations favor one segment of society. Industries and firms that benefit from regulation favor it.1 For example, it is illegal for firms to conspire to fix or raise prices. However, firms can legally raise prices if the government regulates and enforces minimum prices for an industry’s product. In this case, firms in this industry may find it in their own interest to accept regulation if it can enhance their profitability.2

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  The Ashgate Research Companion to International Trade Policy

  • Kenneth Heydon, Stephen Woolcock(Authors)
  • 2016(Publication Date)
  • Routledge

    (Publisher)

  PART VII Trade Policymaking: Regional Perspectives Passage contains an image

  23 The United States: Trade Policy Sleeping – Short Nap or Long Slumber?

  Gary Hufbauer and Kati Suominen

  DOI: 10.4324/9781315613086-31

  Introduction: The Long View

  Three long phases, each lasting about 70 years, can be discerned in US Trade Policy. Between the founding of the Republic in 1788 and the Civil War in 1861, trade policy was rather liberal. For a span of 73 years, the agrarian South, an exporting region, dominated the Congress; consequently, tariffs were imposed to raise revenue and not to protect Northern industry. After the Civil War ended in 1865 until the Smoot–Hawley Tariff of 1930, a span of 65 years, the general direction of trade policy was protection and more protection. With a very few exceptions (notably the Underwood Tariff of 1913), Northern and Midwestern industrial interests controlled Congress and the name of the game was to insulate American manufacturing firms from British and German competition.

  Thanks to the sharp devaluation of the dollar, President Franklin Roosevelt raised the price of gold from US$20 per ounce to US$35 per ounce in 1933, depreciating the dollar by over 50 per cent. The US trade balance improved in the midst of the Great Depression and export interests gained a bigger say in trade policy. Secretary of State Cordell Hull harnessed these interests to enact the Reciprocal Trade Agreements Act of 1934 (RTAA), authorizing the President to cut US tariffs on a bilateral and reciprocal basis. The RTAA was successively renewed until it was superseded by the Trade Expansion Act of 1962. In the meantime, the RTAA served as the legal vehicle for the United States to accede to the General Agreement on Tariffs and Trade (GATT) in 1947 and to participate in the first five rounds of GATT negotiations. Under the auspices of the GATT, with vigorous US leadership, supplemented by bilateral and regional trade agreements, the United States and its main trading partners progressively cut their barriers until the Uruguay Round commitments were fully implemented in 2005. From 1934 until 2005, a span of 71 years, US Trade Policy sought and delivered open markets at home and abroad.

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  The Nafta Puzzle

  Political Parties And Trade In North America

  • Charles Doran, Gregory P Marchildon(Authors)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  4 What Forces Shape American Trade Policy?

  Timothy J. McKeown

  Although foreign trade, historically, has represented a smaller proportion of national income in the United States than in many other advanced capitalist states, American trade politics has been the subject of some of the most influential works in American political science. These studies have been motivated partly by the historical importance of trade issues in American politics, and partly by the fact that in dealing with foreign trade, economic theory has developed to the point where the distributional consequences of various policies are understood with unusual clarity. The latter condition seems to have made trade politics the social scientific equivalent of the biologists' fruit fly, that is, a naturally occurring "test bed" on which one can try out all sorts of theories about why a given policy measure might prevail. As a result, we have studies of trade policy that attribute central importance to everything from the alignment and relative strength of the great powers to the role of ideas in policy-making, from brutally simple interest group calculations of pecuniary gain to the role of the design of government institutions in favoring one type of interest at the expense of another.

  In this chapter, I assess previous studies of trade politics in the United States and elsewhere in order to identify some general features of the making of trade policy that could be relevant to the consideration of NAFTA. The first section covers the most common explanation for trade politics, theories based on the actions of private interest groups, and discusses some special features of interest group politics surrounding NAFTA. Addressing the role of political parties in trade politics, in particular how shifts in comparative advantage affect parties's positions on trade issues, the second section shows that conclusions depend on assumptions about both the relative political strength of old and new industries, and the degree of "stickiness" in the redeployment of economic resources. Next I ask how macroeconomic conditions and governments' macroeconomic policies affect the making of trade policy, concluding that the macroeconomic environment of the 1980s partly explains recent American trade policy. Finally, I assess the thesis that the ideologies of relatively unconstrained public officials are central to understanding trade policy, and critique the most widely cited empirical evidence for it.

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  Policy and Political Theory in Trade Practice

  Multinational Corporations and Global Governments

  • N. Anguelov(Author)
  • 2014(Publication Date)
  • Palgrave Pivot

    (Publisher)

  6 The Trade Policy Process in the United States: Reversing a Legacy of Liberalization?

  Abstract:

  The combined findings of previous chapters on the role of the United States in the creation and diffusion of globalization are posited in an outline explaining how trade policy is created within the United States. The discussion is on the paradox of reversing a legacy of liberalization set forth by the Bretton Woods institution into a reality where the major trade legislative tool is the president’s fast-track authority. The problem is that fast-track limits Congress’s input on trade legislation and in that way impacts the way individual states are represented.

  Anguelov, Nikolay. Policy and Political Theory in Trade Practice: Multinational Corporations and Global Governments . New York: Palgrave Macmillan, 2014. DOI : 10.1057/9781137398369.0008.

  For years, US international trade has been a murky topic for many Americans. It is a complex arena of policy that for the majority of the population is removed from direct focus. The average citizen is aware of US trade and in recent decades has heard increasingly conflicting accounts on what is good and what is bad for the United States as a result of international trade. Historically it has been the United States that has championed free trade and it has been the free market laissez faire economic American legacy that has shaped the policies that define modern globalization (Morrow et al., 1998). The US influence is most notably traceable through its role in the Bretton Woods institutions—the IMF and the International Bank for Reconstruction and Development (IBRD), which is part of the World Bank Group, as it exists today. As the main financial backer and donor, the United States has had a major influence on the policies put forth as conditions on loans issued by these bodies. The unchanging nature of those policies has been one of liberalization, gradual at first in the early years of lending, and becoming more and more “free-market” oriented. However, the average American seldom thinks of the legacy of the Bretton Woods conference and the direction toward ever-increasing levels of free trade that it put forth. That legacy is shaped by the notion that free trade leads to building incentives for cooperation among nations and thus lowers the probability of nations going to war with each other.

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  The Structure and Evolution of Recent U.S. Trade Policy

  • Robert E. Baldwin, Anne O. Krueger, Robert E. Baldwin, Anne O. Krueger(Authors)
  • 2008(Publication Date)
  • University of Chicago Press

    (Publisher)

  1 The Changing Nature of U.S. Trade Policy since World War I1 Robert E. Baldwin 1.1 Introduction Future economic historians will undoubtedly stress trade liberalization as the most distinctive feature of U.S. commercial policy over the past fifty years. As table 1.1 indicates, through a series of thirty bilateral agreements and eight multilateral negotiations, tariffs have been steadily cut to only about 20 percent of their 1930 average level.' The increased use in recent years of nontariff protective measures modifies this liber- alization picture somewhat, but the trend in protection over the period has clearly been downward. Although tariff reduction has been the dominant theme of U.S. trade policy since the early 1930s, important changes have taken place in the nature and extent of U.S. support for this trade liberalization. A consid- eration of these developments is helpful not only to better understand American international economic policy over the period but also to predict possible significant shifts in future U.S. trade policy. To further these objectives, this paper focuses on five closely related trends in or features of U.S. trade policy since the end of World War 11. They are: (1) the shift from the use of trade policy in the immediate postwar period as a means of promoting broad international political and national security goals of the United States to its greater use in recent years as a means of advancing national economic objectives and responding to domestic political pressures based on particular economic interests; (2) the con- tinuing efforts by Congress over the period to modify the trade powers of the president to make U.S. international commercial policy more respon- sive to its wishes; (3) the changes in the positions of the Republican and Robert E. Baldwin is professor of economics at the University of Wisconsin-Madison and a research associate of the National Bureau of Economic Research. 5

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  U.S. International Trade Policy

  An Introduction

  • W. Charles Sawyer(Author)
  • 2017(Publication Date)
  • Praeger

    (Publisher)

  Opening America’s Market: U.S. Foreign Trade Policy Since 1776 . Chapel Hill, NC: University of North Carolina Press.

  Ekelund, Robert B. and Mark Thornton. 2001. “The Confederate Blockade of the South,” Quarterly Journal of Austrian Economics 4(1): 23–42.

  Harriss, C. Lowell. 1989. “Guidance from an Economics Classic: The Centennial of Henry George’s ‘Protection or Free Trade,” American Journal of Economics and Sociology 48(3): 351–56.

  Irwin, Douglas A. 1998. “From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s,” in Michael D. Bordo, Claudia Goldin, and Eugene N. White (eds.), The Defining Moment: The Great Depression and the American Economy in the Twentieth Century. Chicago: University of Chicago Press.

  Irwin, Douglas A. 2003. “New Estimates of the Average Tariff of the United States, 1790–1820,” Journal of Economic History 63(2): 506–13.

  Irwin, Douglas A. 2004. “The Aftermath of Hamilton’s ‘Report on Manufactures,’ ” Journal of Economic History 64(3): 800–21.

  Irwin, Douglas A. 2005. “The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807–09,” Review of International Economics 13(4): 631–45.

  Irwin, Douglas A. 2007. “Tariff Incidence in America’s Gilded Age,” Journal of Economic History 67(3): 582–607.

  Irwin, Douglas A. 2011. Peddling Protectionism: Smoot–Hawley and the Great Depression . Princeton, NJ: Princeton University Press.

  Lovett, William A., Alfred E. Eckes, Jr., and Richard L. Brinkman. 2004. U.S. International Trade Policy: History, Theory, and the WTO . New York: M. E. Sharpe.

  Madsen, Jakob B. 2001. “Trade Barriers and the Collapse of World Trade during the Great Depression,” Southern Economic Journal 67(4): 848–68.

  O’Rourke, Kevin H. and Jeffrey G. Williamson. 2004. “Once More: When Did Globalization Begin?,” European Review of Economic History 8(1): 109–17.

  Reyes, Javier A. and W. Charles Sawyer. 2015. Latin American Economic Development

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  Conflict Among Nations

  Trade Policies in the 1990s

  • Thomas R. Howell(Author)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  7 Trade policy is just a subset of the many policy questions facing government. Those engaged in making the many policy decisions required daily in government -- for example procurement of goods for the Defense Department or deciding whether or not to investigate a transaction for antitrust concerns -- are very often also making trade policy decisions, although in this country they are usually unaware of it. Similarly, those making trade policy decisions perforce are acting within the context of factors which are not solely related to questions of regulating imports or exports. It is the thesis of this chapter that there are a whole range of policy decisions made by the U.S. government that must begin to take into account their impact on the competitiveness of American industries, including services and agriculture.

  Those who make trade policy must begin to be recognize that the seemingly remote objectives of serving national security and enhancement of this nation’s standard of living will be affected by the many, often mundane, decisions which they make. This does not mean that every trade issue is freighted with these broader considerations. But it is imperative to recognize them when they do occur.

  Eight Challenges

  Recognizing That There Is a Problem

  ”My name is Ozymandias, King of Kings, Look on my Works, ye Mighty, and despair! Nothing beside remains. Round the decay Of that colossal Wreck, boundless and bare The lone and level sands stretch far away.” ”Ozymandias,” by Percy Bysshe Shelley, 1817

  Shelley was writing about the great statue of the pharaoh that we know as Ramses. He was telling us that no civilization, no nation, retains its vitality forever -- all pass. Thus passed Sumer, Akkad, Egypt of the Pharaohs, Athens, Rome, the dynasties of China, the Japan of Shoguns, and the empires of the Mayas and Incas, Spain, Portugal, Imperial Britain, and countless others. America’s Founding Fathers realized that they had in this country a delicate experiment with a precarious future.8

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  Research in Economic History

  • Alexander J. Field(Author)
  • 2010(Publication Date)
  • Emerald Group Publishing Limited

    (Publisher)

  U.S. trade policy is now aligned more closely with global trading frameworks like the World Trade Organization, and the economic bargaining power of Pacific Rim economies has substantially increased. However, LDCs under the multilateral trading framework today face many of the same challenges as those of the Pacific Rim in an earlier period. The highest U.S. tariffs still tend to be on products, such as labor-intensive manufactures, in which LDCs have a comparative advantage. 28 To overcome fully the implicit geographic bias in an ostensibly neutral trade policy, the United States would have to reverse patterns of political behavior that go well back in American history. NOTES 1. As early as 1792, Alexander Hamilton made a case for protection in his famous Report on Manufactures . 2. See Taussig (1931) on the history of tariffs of the late nineteenth and early twentieth centuries; Callahan, McDonald, and O’Brien (1994) , Eichengreen (1989), and Irwin and Kroszner (1996) for analyses of the Smoot–Hawley Act; Bailey et al. (1997) , Lusztig (2004) , and Tasca (1938) on the RTAA; and Bagwell and Staiger (1999) and Barton, Goldstein, Josling, and Steinberg (2006) on the GATT/WTO. Other comprehensive studies include Goldstein (1993) , Kaplan and Ryley (1994) , and Kaplan (1996) . 3. The Philippines is, however, largely excluded from the analysis of this paper because of its special trading relationship with the United States during the period considered. 4. Please see Appendix A for a detailed list of goods represented in each category. For the other years, every effort has been made to maintain the same set of goods in each category for consistency. Some discrepancies arise due to slight changes in classification and grouping throughout the different years. However, the tariff rates within a year should not be affected. As for tariff rates across years, the broad trends should not be largely affected by the discrepancies either.

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  International Economics

  • Dominick Salvatore(Author)
  • 2020(Publication Date)
  • Wiley

    (Publisher)

  9.6 History of U.S. Commercial Policy 247 of world trade (American imports in 1932 were only 31 percent of their 1929 level, and exports fell even more), and this contributed in a significant way to the spreading and deep-ening of the depression around the world. To reverse the trend toward sharply reduced world trade, the U.S. Congress under the new Roosevelt administration passed the Trade Agreements Act of 1934 . The general principles embodied in this act remained the basis for all subsequent trade legislation in the United States. The act transferred the formulation of trade policy from the more politi-cally minded Congress to the President and authorized the President to negotiate with other nations mutual tariff reductions by as much as 50 percent of the rates set under the Smoot– Hawley Tariff Act. The Trade Agreements Act was renewed a total of 11 times before it was replaced in 1962 by the Trade Expansion Act. By 1947, the average U.S. import duty was 50 percent below its 1934 level. The Trade Agreements Act of 1934 and all subsequent trade legislation were based on the most-favored-nation principle . This nondiscrimination principle extended to all trade partners any reciprocal tariff reduction negotiated by the United States with any of its trade partners. The United States would similarly benefit from any bilateral tariff reduction negotiated between any other two nations that were signatories of the most-favored-nation agreement. However, this bilateral trade approach faced the serious shortcoming that tar-iff reductions were negotiated for the most part only in commodities that dominated bilat-eral trade. Otherwise, many “freeloader” nations, not directly involved in the negotiations and not making any tariff concession (reduction) of their own, would also have benefited from reciprocal tariff reductions negotiated between any other two nations.

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  International Economics

  • Dominick Salvatore(Author)
  • 2019(Publication Date)
  • Wiley

    (Publisher)

  9.6 History of U.S. Commercial Policy 247 of world trade (American imports in 1932 were only 31 percent of their 1929 level, and exports fell even more), and this contributed in a significant way to the spreading and deep- ening of the depression around the world. To reverse the trend toward sharply reduced world trade, the U.S. Congress under the new Roosevelt administration passed the Trade Agreements Act of 1934. The general principles embodied in this act remained the basis for all subsequent trade legislation in the United States. The act transferred the formulation of trade policy from the more politi- cally minded Congress to the President and authorized the President to negotiate with other nations mutual tariff reductions by as much as 50 percent of the rates set under the Smoot– Hawley Tariff Act. The Trade Agreements Act was renewed a total of 11 times before it was replaced in 1962 by the Trade Expansion Act. By 1947, the average U.S. import duty was 50 percent below its 1934 level. The Trade Agreements Act of 1934 and all subsequent trade legislation were based on the most-favored-nation principle. This nondiscrimination principle extended to all trade partners any reciprocal tariff reduction negotiated by the United States with any of its trade partners. The United States would similarly benefit from any bilateral tariff reduction negotiated between any other two nations that were signatories of the most-favored-nation agreement. However, this bilateral trade approach faced the serious shortcoming that tar- iff reductions were negotiated for the most part only in commodities that dominated bilat- eral trade. Otherwise, many “freeloader” nations, not directly involved in the negotiations and not making any tariff concession (reduction) of their own, would also have benefited from reciprocal tariff reductions negotiated between any other two nations.

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  America's Trade Policy Towards Japan

  Demanding Results

  • John Kunkel(Author)
  • 2003(Publication Date)
  • Routledge

    (Publisher)

  Figure 2.1 shows the continued integration of the United States into the international economy. Total trade in goods and services (exports plus imports), imports and manufactured imports have continued to rise as a share of US gross domestic product (GDP). Import volumes rose at an annual growth rate of over 6 per cent between 1965 and 2000 and import elasticity increased in the 1990s. Between 1990 and 2000, US merchandise import volumes grew at an average rate of 8.5 per cent per annum and America’s share of world merchandise imports rose from 14.8 to 19.4 per cent (WTO 2001a).

  In terms of policy instruments, the general picture is one of low tariffs with pockets of high protection, but no generalised move towards closure. Reciprocal tariff bargaining has seen the average applied tariff rate of the United States fall to 4.1 per cent and all tariff rates are bound (WTO 2001b). The major long-term departures from this overall trend have been quantitative restrictions on maritime services, textiles, apparel and footwear and parts of the agricultural sector. In addition, since the late 1960s,a number of standardised-technology manufacturing industries with long-term structural adjustment problems have gained varying levels of protection. According to one estimate, the share of US imports affected by some form of non-tariff barrier (NTB) increased from 36 per cent in 1966 to 45 per cent in 1986 (Laird and Yeats 1990). More recent analysis suggests that the share of US tariff lines subject to NTBs has declined from over 20 per cent in the late 1980s to 3 per cent in 1996 (OECD 1997). Simultaneous moves towards greater openness in some areas and increased closure in others make neat conclusions about trends in US protection difficult to draw. For example, the United States has consistently been the world’s most active user of anti-dumping and countervailing duty measures. But Uruguay Round commitments and continued strong import growth point to the maintenance of American openness to trade.3

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