THE policy of the United States regarding reciprocal trade arrangements with other countries has gone through several phases; and it now seems likely to enter another. The direct and immediate effect of a realignment is easily exaggerated. Moreover, it seems a dry subject, involving details about processes of negotiation. And yet, in its underlying essentials it has a very great importance. The spirit and temper in which it is approached make an enormous difference in our relations with other countries, in our own gains or losses when trading with them, in our influence on the whole course of world development. In what follows I shall deal with the arid details only so far as some knowledge of them is necessary in order to understand this particular situation. My main purpose will be to direct attention to the larger lessons.
Our present policy regarding reciprocal trade arrangements dates in part from 1909, in part from the first half of the decade 1920-30. It rests to some extent on diplomatic action, mainly on legislation. The legislative provisions go back to the tariff act of 1909, when the previous reciprocity provisions of 1897 were abolished, and it was enacted that the United States would deal with foreign countries simply and solely on the penalty basis -- the threat basis, or, if you please, the holding up of a club. The duties then imposed (with the extraordinary detail that appears in all our tariff acts) were expressly stated to constitute the minimum tariff of the United States. The maximum was, on each several rate, 25 percent in addition. This maximum tariff the President was authorized to apply to imports from a country which in any way "unduly discriminated" against the United States. The minimum tariff -- that is, the real tariff -- was under no circumstances to be lowered. That is, the United States offered nothing in the way of concession; we simply threatened the foreign countries if they "unduly discriminated."
Substantially the same was enacted in 1922, when the
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