Commercializing Foreign Policy? American Trade Policy, Then and Now

By Nivola, Pietro S. | Brookings Review, Spring 1997 | Go to article overview

Commercializing Foreign Policy? American Trade Policy, Then and Now


Nivola, Pietro S., Brookings Review


When President Clinton took office in 1993, his administration appeared determined to focus single-mindedly on the nation's economic problems. International issues were to receive less attention, except inasmuch as they might affect American commerce. The Clinton-Gore ticket had campaigned on the notion that the United States was suffering its "worst economic performance since the Great Depression," and that conditions might get worse if we continued to receive "plenty of empty promises," instead of "results," from our trading partners. According to the Clinton paradigm, with the Cold War safely over, the time had come to shift priorities. "The days when we could afford to subordinate our economic interests to foreign policy or defense concerns are long past," explained Mickey Kantor, then the U.S. trade representative.

In the ensuing years, however, the global school of hard knocks did not easily permit narrow commercial considerations to crowd out broader concerns in foreign affairs. So, by 1996, questions of international stability and security had regained more of their traditional claim on U.S. policy, even for a president preoccupied with domestic matters.

The correction is welcome. Commercial boosterism in the early days of the Clinton presidency seemed premised in part on the false impression that previous presidents and Congresses had traded away American prosperity in deference to geostrategic interests. Had this misperception persisted, it might have risked a serious intensification of trade tensions with many countries and presented the strange spectacle of U.S. trade negotiators demanding the equivalent of an affirmative action program to compensate for mythical economic losses during the Cold War. Statecraft in today's still perilous world requires a proper balance between trade policy and other missions.

THE MYTH OF COMMERCIAL MARTYRDOM

In the immediate aftermath of World War II, the U.S. government adopted a relatively openhanded approach toward allies and former adversaries alike, offering grants, technical aid, and credits under the Marshall Plan. The altruism, however, reflected unique and temporary circumstances. Shell-shocked economies overseas had barely begun to recover. As an undisputed economic hegemon, the United States could readily afford to be generous without the quid pro quo of prompt repayment. So dominant was the U.S. economy that there was not much difference between doing favors to others and for oneself. Incentives to underwrite economic growth abroad were strong at a time when the preponderant gains ultimately redounded to the United States.

But even then, the Americans did not as a matter of course go around lowering U.S. tariffs unilaterally. Tariffs were reduced, but on a two-way basis. Presidents did not have much choice; they were explicitly required, under the Reciprocal Trade Agreements Act of 1934, to negotiate reciprocal concessions. Congress often made the U.S. commitment to free trade conditional on the protection of powerful constituencies. In exchange for renewing presidential authority to negotiate tariff cuts, lawmakers required President Truman to heed a so-called peril-point provision limiting cuts to levels that would not impair sensitive domestic producers. The executive's trade negotiating authority was extended through the 1950s, but President Eisenhower had to order limits on imports of cotton fibers and crude oil. On his watch, despite an increasingly favorable trade balance in the farm sector, Congress secured quantitative limits on imports of sugar and dairy products. The legislators also insisted on waiving obligations to remove these limits and to discipline U.S. crop production programs under the GATT. Eisenhower had limited success in overturning stringent Buy American procurement rules that had been (and remain) in effect since 1933.

Subsequently, to ensure passage of the Trade Expansion Act of 1962, which authorized another round of international trade negotiations, President Kennedy widened the use of import quotas on cottons.

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