FDR’s Comprehensive Approach to Freer Trade

[ProSense]

FDR’s Comprehensive Approach to Freer Trade

by David Woolner

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The driving force behind this effort was FDR’s Secretary of State, Cordell Hull, who considered the passage of Smoot-Hawley an unmitigated disaster. Hull had been arguing in favor of freer trade for decades, both as a Democratic congressman and later senator from Tennessee. Given the long-standing protectionist tendencies of Congress — which reached their zenith with the passage of Smoot-Hawley, the highest tariff in U.S. history — Hull faced an uphill struggle to accomplish this task. He also had to overcome FDR’s initial reluctance to embrace his ideas, as the president preferred the policies of the “economic nationalists” within his administration during his first year in office. By 1934, however, FDR’s attitude began to change, and in March of that year the president threw his support behind Hull’s proposed Reciprocal Trade Agreements Act — a landmark piece of legislation that fundamentally altered the way in which the United States carried out foreign economic policy.

Convinced that the country was not ready for a truly multilateral approach to freer trade, Hull’s legislation sought to establish a system of bilateral agreements through which the United States would seek reciprocal reductions in the duties imposed on specific commodities with other interested governments. These reductions would then be generalized by the application of the most-favored-nation principle, with the result that the reduction accorded to a commodity from one country would then be accorded to the same commodity when imported from other countries. Well aware of the lingering resistance to tariff reduction that remained in Congress, Hull insisted that the power to make these agreements must rest with the president alone, without the necessity of submitting them to the Senate for approval. Under the act, the president would be granted the power to decrease or increase existing rates by as much as 50 percent in return for reciprocal trade concessions granted by the other country.

The 1934 Act granted the president this authority for three years, but it was renewed in 1937 and 1940, and over the course of this period the United States negotiated 22 reciprocal trade agreements. Of these, the two most consequential were the agreements with Canada, signed in 1935, and Great Britain, signed in 1938, in part because they signaled a move away from Imperial Preference and hence protectionism, and in part because they were regarded as indicative of growing solidarity among the Atlantic powers on the eve of the Second World War. It is also important to note that Hull, like many of his contemporaries, including FDR, regarded protectionism as antithetical to the average worker — first, because in Hull’s view high tariffs shifted the burden of financing the government from the rich to the poor, and secondly, because Hull believed that high tariffs concentrated wealth in the hands of the industrial elite, who, as a consequence, wielded an undue or even corrupting influence in Washington. As such, both FDR and Hull saw the opening up of the world’s economy as a positive measure that would help alleviate global poverty, improve the lives of workers, reduce tensions among nations, and help usher in a new age of peace and prosperity. Indeed, by the time the U.S. entered the war, this conviction had intensified to the point where the two men concluded that the root cause of the war was economic depravity.

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Of course, it is important to remember that the Roosevelt administration’s efforts to expand world trade were accompanied by such critical pieces of legislation as the National Labor Relations Act and Fair Labor Standards Act, which vastly strengthened the place of unions in American life. The 1930s and ’40s were also years in which the government engaged in an unprecedented level of investment in America’s infrastructure and industry — largely through deficit spending — that helped vastly expand our manufacturing base and render the United States the most powerful industrialized country in the world. Our efforts to expand trade and do away with protection were only part of a broader effort to reform the U.S. economy in such a way as to provide what FDR liked to call “economic security” for every American.

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[Enrique]

1. so in the primaries we get angry denials that Obama is pro-free-trade

every story showing that Obama is a free trader is a DIRTY LIE, proven by the fact that the Obama campaign DENIED IT.

Now, after Obama's president, we get arguments FOR free trade.

[ProSense]

2. Well

"so in the primaries we get angry denials that Obama is pro-free-trade...Now, after Obama's president, we get arguments FOR free trade."

...the OP is an interesting bit of history, but since you bring it up:

The Obama-Biden Plan

Trade

Barack Obama and Joe Biden believe that trade with foreign nations should strengthen the American economy and create more American jobs. They will stand firm against agreements that undermine our economic security.

•Fight for Fair Trade: Obama and Biden will fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama and Biden will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

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Not only were the agreements were renegotiated, but also President Obama has demonstrated that he will enforce U.S. trade laws.

Statement by the President on the Passage of Trade Agreements and Trade Adjustment Assistance

The landmark trade agreements and assistance for American workers that passed tonight are a major win for American workers and businesses. I’ve fought to make sure that these trade agreements with South Korea, Colombia and Panama deliver the best possible deal for our country, and I’ve insisted that we do more to help American workers who have been affected by global competition. Tonight’s vote, with bipartisan support, will significantly boost exports that bear the proud label “Made in America,” support tens of thousands of good-paying American jobs and protect labor rights, the environment and intellectual property. American automakers, farmers, ranchers and manufacturers, including many small businesses, will be able to compete and win in new markets. I look forward to signing these agreements, which will help achieve my goal of doubling American exports and keeping America competitive in the 21st century.

[Name removed]

3. Deleted message

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[ProSense]

4. From that response,

I suspect a decent rebuttal is hard to come up with.

[ieoeja]

5. Why Liberals and Conservatives reversed positions.

Back then, the United States was a cheap labor country and supplier of goods. So we stole the jobs from Europe. The protectionist strategy then was to protect American companies from overseas competition. That meant protecting more than the 1%, but considerably less than 50%.

Today, that has reversed. Now 1% wants to take advantage of overseas labor. Which hurts the 99%.

I'm not opposed to "fair" trade. While other reasons were often used to whip up the populace, trade restrictions may be the actual #1 cause of wars in the world's history. And I do want to see the world's poor, not just our poor, improve their lot in life. To that end, the worst thing the US does is work against anyone who tries to improve their country because we want to protect the 1% cheap labor supply. The stated theory is that sharing jobs overseas will raise their standard to us. But then we do everything in our power to prevent that from actually happening.