The RTAA, updated intermittently until 1961, is a multilateral trade negotiation in GATT[16] and negotiations with new Member States. [17] When negotiating agreements under the RTAA, the United States generally proceeded by making direct concessions only to so-called main suppliers – that is, to countries that were or would become the main source or major source of supply for the product in question. The concessions were granted in exchange for opening foreign markets to U.S. exports. 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. He is widely credited with ushering in the era of liberal trade policy that lasted throughout the 20th century.
[2] The first reason for the RTAA was to help America emerge from the Great Depression, which had drastically reduced the volume of international trade. In its message to Congress advocating for the bill, FDR pointed out that “the nation`s exports in 1933 represented only 52% of the volume of 1929 and 32% of the value of 1929” [3]. As U.S. tariffs fell dramatically, global markets were also increasingly liberalized. World trade has grown rapidly. The RTAA was a U.S. law, but provided the first widely used system of guidelines for bilateral trade agreements. The United States and European nations began to avoid a “man for himself” policy that pursued domestic trade goals at the expense of other nations.
Instead, countries began to realize the benefits of trade cooperation. The Reciprocal Trade Agreements Act was enacted on June 12, 1934, as part of the Roosevelt administration`s efforts to pull America out of the Great Depression. The RTAA served as an integral step in America`s transition from economic crisis to global leadership. FDR believed that a full and sustainable recovery would depend on strengthening international trade to boost domestic growth and demand. To secure our country`s place in the global economy, the U.S. president and Congress have had to work together to negotiate trade deals to reduce tariffs on goods and boost U.S. exports. Increased international trade fostered the growth-boosting aspects of the New Deal`s domestic programs, and the successful passage of the RTAA led to the conclusion of 19 new trade agreements between 1934 and 1939, strong growth in U.S. exports, and the recovery of the U.S. economy. Minister Hull`s first efforts were to conclude reciprocal trade agreements with Latin American countries, a region considered crucial to U.S.
trade and security, where rival powers (particularly Germany) gained ground at the expense of U.S. exporters. However, Hull was only able to negotiate agreements with three out of ten South American countries in September 1939, when the mutual trade program was met with resistance from Latin Americans, who opposed the most-favored-nation clause of abandoning all bilateral agreements with other countries. Given that pressure from Congress in the name of vested interests has allowed Latin American countries to avoid unlimited access to the U.S. market, these countries would have been seriously hampered in their efforts to sell their raw materials abroad if they had abolished bilateral agreements with European countries that absorbed much of their exports. The legislative development of the RTAA and trade policy is complex, but “the tradition of the Reciprocal Trade Agreement Act continues in the form of the modern Trade Promotion Authority (TPA)” [10], a set of laws that guide Congress in the purposes of trade [11]. In addition, trade policy is once again controversial. After a long period of tariff cuts and international trade liberalization, higher tariffs and a more protectionist trade policy have become popular again. President Franklin Roosevelt signed the Reciprocal Tariff Act – better known as the Reciprocal Trade Agreement Act (RTAA) – on June 12, 1934 [1]. It was an amendment to the Tariff Act of 1930. The new law gave FDR “the power to adjust tariff rates [and] the power to negotiate bilateral trade agreements without the prior consent of Congress” [2]. .
