Freer Trade
History of Commercial Treaties: Freer Trade
Hopeful omens, however, began to appear. In 1934 the United States passed the Reciprocal Trade Agreement, by which the president was empowered to lower import duties on a country’s goods if that country reciprocated. The United States thereby moved from a protectionist policy to one of freer trade. In 1947 the General Agreement on Tariffs and Trade (GATT), designed to reduce tariffs and eliminate discriminatory practices in international trade, was signed by 23 countries, including the United States. Eventually more than 100 countries signed GATT. In 1994 GATT signatories signed a new trade agreement that cut tariffs overall by one-third, protected intellectual property rights, and opened trade in investments and services. This agreement also created the World Trade Organization to enforce its provisions starting in 1995. Regional groupings, established to eliminate tariff barriers among members and to promote mutual cooperation and trade, include the European Union (formerly called the European Community or the Common Market, established in 1957), the European Free Trade Association (EFTA, 1960), the Latin American Integration Association (LAIA, 1980), and the Central American Common Market (CACM, 1960).
The complex modern structure of the commercial treaty has been significant in stabilizing international trade and standardizing trade practices. An important commercial treaty, which also overcame ideological barriers, was signed by the United States and the Union of Soviet Socialist Republics in 1972; it also resolved long-standing differences in shipping and previously outstanding debts and provided a new framework for long-range trade. Another significant accord, the North American Free Trade Agreement (NAFTA), which took effect in January 1994, outlined tariff cuts and the elimination of trade barriers between the United States, Canada, and Mexico. (1)
In this Section: Commercial Treaties, Commercial Treaties Conditions, Trade Agreements, Commercial Treaties History (including National Treatment, Protectionism and Freer Trade) and Most-Favored-Nation Clause.
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