U.S. trade and industrial policies must engage the global economy more successfully. Some 10 to 12 million jobs have been lost by a failure to enforce reciprocity. Between 1981 and 1997 U.S. trade deficits totaled $2,000 billion; U.S. current account deficits totaled $1,500 billion. The United States switched from being the world's leading creditor to become its largest debtor. U.S. economic growth and industrial competitiveness suffered. Greater structural unemployment, inequality, and social stress followed. America's middle class feels squeezed and uneasy, worried about jobs, income security, and pensions. The U.S. economy has become unbalanced and more vulnerable to economic shocks, speculative disruptions, devaluation pressures, and dislocations. This neglect cannot continue.
This book represents a post-Cold War reassessment of U.S. trade policy. It reviews U.S. trade history, theory, and the evolution of GATT 1947 into GATT 1994 and the World Trade Organization agreement. In Chapter I William Lovett provides an introductory overview. Chapter 2 by Alfred Eckes begins U.S. trade history with the new republic emerging from colonialism. The United States had trouble breaking into foreign markets in an era of mercantilism. Like most countries, including Britain between 1650 and the 1840s, the United States used tariffs and industrial development as a nation-building strategy. U.S. trade policy was very successful between 1791 and the 1920s in building up industrial strength, which created the world's most powerful economy.
In Franklin Roosevelt's New Deal era, the United States switched to a freer trade policy--supposedly emphasizing reciprocity. Then World War II and the Cold War led the United States to aid allies and accept trading relations that were not fully reciprocal. Because the United States was stronger in technology, industry, and finance after World War II, it could afford to tolerate asymmetries and unequal access (at least for a while). But by the 1970s, U.S. industry was beginning to suffer competitiveness problems. These difficulties and trade deficits grew worse in the 1980s-90s.