Reciprocal Trade Agreements Program

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Reciprocal Trade Agreements Program

Summary of Reciprocal Trade Agreements Program

An act of Congress which authorized the president to reduce tariffs in exchange for like concessions by trading partners. The Reciprocal Trade Agreements Act of 1934, enacted as an amendment to the Smoot-Hawley Act (read this and related legal terms for further details) of 1930, authorized reductions up to 50 percent in tariff rates under bilateral agreements. The act prescribed that each agreement concluded contain an unconditional Most Favored Nation (read this and related legal terms for further details) clause, thereby providing that any reduction that either party to the agreement might grant to a third nation would automatically apply to the other signatory’s trade as well. The act was diluted by post-World War II legislation animated by protectionist and defense-oriented forces. The Trade Expansion Act of 1962 largely superseded the RTA program, as did U. S. participation in the General Agreement on Tariffs and Trade (read about the GATT for further details).

(Main Author: William J. Miller)

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