2 weeks Ago
From early in World War II, the United States led a broad movement toward freer trade that has been the foundation of our unprecedented postwar prosperity. That may be changing. President Donald Trump’s tariff moves are distinctively dramatic, but are part of a longer-term trend.
Protectionism has been growing since the last phase of the Obama administration. The administration’s Transpacific Partnership (TPP) treaty negotiations initially garnered strong bipartisan support, but 2016 Democratic Party presidential nominee Hillary Clinton and others ultimately opposed the treaty. Eventually, the TPP and the similar Transatlantic Free Trade Area (TAFTA) were sidelined.
These regional negotiations followed several important bilateral trade agreements. In 2011, after four years’ delay, the U.S.
Congress ratified free trade agreements with Colombia, Panama and South Korea. Approval was timed to coincide with the visit of South Korea President Lee Myung-bak. The largest bilateral trade agreement in history ended tariffs on more than 90% of trade categories between the two nations.
South Korea reflects other Asia economies in abandoning previous protectionism designed to shelter promising but weak domestic enterprises. Following the Korean War, the nation was among the poorest in the world, but today ranks among the richest and most productive economies in the world. Listen now and subscribe: Apple Podcasts | Spotify | Stitcher | RSS Feed | SoundStack | All Of Our Podcasts These trade agreements also generated bipartisan Congressional support.
Normally warring Democrats and Republicans found temporary consensus on international trade. After World War II, regular comprehensive international negotiations greatly expanded trade in both goods and services. The limited Dillon Round during the Eisenhower administration was followed by the Kennedy Round, a comprehensive reduction in trade barriers completed in 1967.
Sentimental but also substantive reasons led to naming these breakthrough negotiations for the assassinated president, who initiated the effort and secured fast track authority from Congress. The landmark Kennedy achievement was followed by the Tokyo Round completed in the 1970s, and the Uruguay Round in the 1980s. The Uruguay Round during the Reagan administration, spearheaded by U.
S. Trade Representative Clayton Yeutter, was a major success. The current Doha Round, expanded to include developing nations, is stalled by vexing agriculture issues separating Africa and Europe.
In 1944 at Bretton Woods New Hampshire, in the midst of global war, the Allies hammered out the post-war economic structure, to operate under the UN - the International Monetary Fund and the World Bank. The General Agreement on Tariffs and Trade (GATT), formed in 1948, became the World Trade Organization (WTO) in 1995. Functions of the institutions have changed, but the structures have proven remarkably durable.
Those leaders planned long-term. The original United Nations vision was in the Atlantic Charter, announced by Prime Minister Winston Churchill and President Franklin D. Roosevelt after their epic Newfoundland summit several months before the attack on Pearl Harbor.
The British leader in his comprehensive history of the Second World War notes that he wrote the first draft of the Charter. Adam Smith and others realized free trade was related to political freedom. His classic “The Wealth of Nations” was published in 1776, the same year the American Revolution began.
Trump’s tariffs harken back to an earlier period, when the modern U.S. economy was emerging.
Economic realities are different now. Protectionist trends are present, but powerful international realities also have not changed..
