Courtesy Reuters

How Trade Agreements Are Made

THE approval of the Trade Agreements Act on June 12, 1934, initiated a new and interesting chapter in American tariff history. Not only did it bring to an end a policy of exaggerated protectionism running riot under the highest tariff known to American history, but it brought to successful fruition the idea of tariff adjustment through reciprocal agreement with other nations, first attempted with but moderate success under the McKinley Tariff Act of 1890 and the Dingley Tariff Act of 1897. The new legislation was framed upon a combination of three principles -- tariff negotiation by executive agreement; Congressional delegation to the President of the power of tariff adjustment within prescribed limits; and generalization of all tariff reductions (except those granted to Cuba) to the products of all countries which do not discriminate against American commerce. It has proved intensely practical. Already 16 trade agreements have been negotiated under its authority with nations accounting for almost 40 percent of the total foreign trade of the United States.

The trade agreements program has also proved of outstanding significance from a world point of view. Coming into effect just when the economic aftermath of the war and the crash of 1929 were engendering new forms of trade restrictions of unprecedented severity and when the drive toward economic nationalism and trading in exclusive preferences was becoming more and more intense, it has proved one of the most effective programs being carried out anywhere to combat these disastrous tendencies.

The success of a program in large measure depends upon its administration. The manner in which agreements come into being -- how the machinery is organized and how it functions in practice -- is therefore of considerable importance.

I. ORGANIZATION

When the Trade Agreements Act was passed in 1934 the first question which confronted us was a very practical one: What was the most effective kind of machinery which could be devised for carrying out the infinitely difficult and complex task?

Interdepartmental Organization

Already many agencies in the Government were at work on foreign

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