Settlement and Reconstruction

Transcription

1 Settlement and Reconstruction Lecture Outline Historic shift in U.S. policy - global economic leadership Shaping the Post-War World Economy - Early shifts in U.S. policy (RTAA, Tripartite Agreement) - Wartime planning (Atlantic Charter, Lend-Lease) The Bretton Woods System - Trade (ITO, GATT) - Money and Finance (IMF) - Development (IBRD World Bank) 1

2 Explaining the origins of U.S. leadership 1. International conditions - U.S. hegemonic economically and militarily (Figure 1-2) - Fear of Soviet expansionism jump-starts engagement 2. Domestic Factors - Endowments: relative abundance of capital in the U.S. after the war renders capital-intensive U.S. manufacturing very competitive - Interests: Free trading Democrats dominate presidency and Congress; meanwhile, the Cold War mitigates opposition of remaining isolationist sentiment - Institutions: RTAA produces bias toward free trade (more below). 2

3 Reciprocal Trade Agreements Act of 1934: A Revolution in U.S. Trade Policy Institutions Two key features of the RTAA: 1. Delegation: Congress delegates its constitutional authority on trade matters to the executive branch. 2. Reciprocity: Congress couples U.S. tariff reductions to foreign tariff reductions. Meant that the value of concessions the U.S. offered to a trading partner had to be commensurate with the value of the concessions that it received in return. 3

4 How did RTAA change trade policy outcomes? Before RTAA (1934), trade policy was protectionist, highly partisan, and subject to logrolling. After RTAA, trade policy became far less protectionist, less partisan, and less subject to protectionist log-rolls (Figures 3-4). How did RTAA reduce log-rolling? Congress gives up right to set tariffs on specific goods, making vote-trading impossible. 4

5 How did RTAA Moves US to Freer Trade? Delegation to the executive gave policy control to a politician that is is beholden to a broad national-wide constituency Reciprocity bolstered the lobbying position of exporters in the political process. By linked US tariff reduction to foreign tariff reduction, RTAA fostered the development of exporters as an organized free-trade lobby group Reciprocity increased the size of the export sector and thereby enhanced subsequent support for RTAA and freer trade--a dynamic process generating lower tariffs 5

6 How did RTAA reduce partisanship on trade policy? Reciprocal trade bargains led to the growth of export interests within the US, leading some Republicans to change their long-standing opposition to free trade Reciprocity increased the importance of exports to constituencies in congressional districts, which in turn changed the trade policy preferences of Republican representatives. 6

7 Post-WWII International Trade Order Origins of the GATT Antecedents in the Reciprocal Trade Agreements Act (RTAA) International Trade Organization (ITO) of 1947 Failure to ratify the ITO GATT born a provisional (informal) institution in 1948 GATT subsumed in 1995 by World Trade Organization (WTO) Theoretical Underpinnings of the GATT Benefits of free trade via comparative advantage End bias in domestic politics that gives rise to protectionism by requiring reciprocity (as in RTAA) Nondiscrimination (via MFN) to ensure the widest possible gains 7

8 Figure 1: Position of the U.S. in the World Economy 8

9 Figure 2: U.S. Exports and Imports as a Share of GNP 9

10 Figure 3: Partisan control and U.S. Trade Policy Note: Partisan control = one party in control of both houses of Congress and the presidency. Source: William R. Keech and Kyoungsan Pak, Partisanship, Institutions, and Change in American Trade Policy. Journal of Politics 57, 4 (November 1995):

11 Figure 4: Party Voting in the U.S. Congress, Percentage of party members voting for freer trade, Source: Michael J. Hiscox, The Magic Bullet? The RTAA, Institutional Reform and Trade Liberalization. International Organization 53, 4 (Autumn 1999):