What Is A Reciprocal Trade Agreement

Although Congress has entrusted the Ministry of Foreign Affairs with primary responsibility for negotiations with other nations, it has instructed the Customs Commission and other government authorities to participate in the development of a list of concessions that could be made or requested from foreign countries in exchange. Any trade agreement should adopt the principle of “unconditional treatment of the most favoured nation” and allow for a reduction in import duties of up to 50% of the Smoot-Hawley level. The U.S. State Department also found good use of free trade expansion after World War II. Many in the Department of Foreign Affairs saw multilateral trade agreements as a means of integrating the world in accordance with the Marshall Plan and the Monroe Doctrine. U.S. trade policy has become an integral part of U.S. foreign policy. This search for free trade as diplomacy intensified during the Cold War, when the United States competed with the Soviet Union for relations around the world. [20] During the last “Uruguay Round” (1986-1994), GATT created its own successor, the World Trade Organization (WTO), which established the basic rules for replacing bilateral agreements with a multilateral trading system between more than 140 member states. The WTO has gone beyond tariff reduction efforts to promote trade liberalization in areas such as information technology and financial services.

The WTO secretariat is based in Geneva, but decisions are taken by member states at semi-annual ministerial conferences. Because of the benefits of accession, even former communist countries, including Russia and China, have tried to join. At the end of the 20th century, the WTO was attacked by environmentalists, trade unions and proponents of sustainable development in many countries, because the organization was able to repeal national protection laws when they were seen as an obstacle to free trade, and because critics argued that the WTO was promoting an international economic system that favoured rich countries and large private companies at the expense of the poor. Ministerial conferences have often been the scene of open-air public events and clashes between the poorest third world countries and the most prosperous industrialized countries. Together with the major international credit agencies – the World Bank and the International Monetary Fund – the WTO has been forced to defend the impartiality of a policy to support global economic growth.

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