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What Was The Reciprocal Trade Agreements Act

15 April 2021 No Comment

The RTAA was regularly renewed by Congress until it was replaced in 1962 by the Trade Expansion Act, which President John F. Kennedy wanted to give it broader power to negotiate reciprocal trade agreements with the European Common Market. The Common Market was created in 1957 to remove all trade barriers in six major Western European countries: France, West Germany, Italy, Belgium, the Netherlands and Luxembourg. Their economic strength, increasing pressure on the U.S. balance of payments and the threat of a communist aid and trade offensive prompted Congress to pass the Trade Expansion Act. While the United States had negotiated in the past on a point-by-point basis, the president could in the future decide to reduce tariffs for an industry or an extended base for all products. , in exchange for similar cuts from other countries. To address the tariff problems created by the common market, the President was allowed to reduce tariffs on industrial products by more than 50 per cent or to eliminate them altogether if the United States and the common market together accounted for 80% or more of the global value of exports. 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 1945, the United States signed 32 reciprocal trade agreements with 27 countries. [4] In addition, the conclusion of the General Agreement on Tariffs and Trade was taken by the Authority under the RTAA. The Reciprocal Tariff Act (adopted on 12 June 1934, Chapter 474, 48 Stat. 943, 19 U.C No. 1351) provided for the negotiation of customs agreements between the United States and various nations, including Latin American countries. [1] The law served as an institutional reform to allow the president to negotiate with foreign nations a reduction in tariffs in exchange for a reciprocal reduction in U.S. tariffs. This has led to a reduction in tariffs. As more and more U.S.

industries began to benefit from tariff cuts, some of them began campaigning with Congress for lower tariffs. Until RTAA, Congress had been mainly pressured by industries that wanted to create or increase tariffs to protect their industry. This change has also helped to maintain many of the benefits of trade liberalization. In short, the political incentive to increase tariffs has diminished and the political incentive to reduce tariffs has increased. [3] The Trade Promotion Authority aims to create opportunities for domestic workers, just as Roosevelt`s RTAA supported job creation on the national territory by trading with the New Deal programs.


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