An analysis of the foreign economic policy of the United States in its relation to the International Trade Organization: An inquiry into the likelihood of American adherence

143 Pages·06.52 MB·English

by  Fabre, Victor A

AN ANALYSIS OP THE FOREIGN ECONOMIC POLICY
OP THE UNITED STATES IN ITS RELATION TO
THE INTERNATIONAL TRADE ORGANIZATION
*«- ■£* •JJ*
AN INQUIRY INTO THE LIKELIHOOD OP
AMERICAN ADHERENCE
A Thesis
Presented to
the Faculty of the Department
of In te rn a tio n a l R elations
The U niversity of Southern C alifo rn ia
In P a rtia l F u lfillm en t
o f the Requirements fo r the Degree
M aster o f A rts
by
V ictor A. Fahre
June 1950
UMI Number: EP59891
All rights reserved
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UMI EP59891
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i V a
This thesis, written by
V ictor A. Pabr©
under the-guidance of h%M.... Faculty Committee,
and approved by all its members, has been
presented to and accepted by the Council on
Graduate Study and Research in partial fulfill­
ment of the requirements for the degree of
M aster of A rts
..........................
Faculty Committee
K^nmrman
TABLE OP CONTENTS
CHAPTER PAGE
I. INTRODH CT IO N .......................................................................... 1
II. THE TARIFF PROBLEM IN RECENT AMERICAN
HISTORY.............................. 12
Wilson-Gorman Act o f 1894• ........................ 15
The Dingley Act o f 1 8 9 ? .............................. . 16
Payne-A ldrich Act of 1909 « • • • • • • 17
Underwood Act o f 1 9 1 3 .......................................... 18
T a riff Commission Act of 1 9 1 6 ........................ 19
Fordney-McCumber Act o f1 922 21
Hawley-Smoot Act o f 1930 . . . . . . . 23
I I I . RECIPROCAL TRADE AGREEMENT ACT OF 1934 . . 25
Background of the Act .............................. 26
S a lie n t featu res .................................... 29
Escape clauses .......................................... 32
An evaluation ......................... 36
IV. THE HISTORY AND FOUNDATIONS OF ITO . . . . 44
Economic debacle of the th ir tie s . . . 45
Economic d iso rd er of post-W orld
War II . . . . 54
The American proposals • • • • • • • • 55
The G eneral Agreement on T ariffs and
Trade ............................................................. 58
The Havana C h a r t e r ............................................. 60
ii
CHAPTER PAGE
V. OBSTACLES TO AGREEMENT....................................* . . 64
Post-w ar economic and p o litic a l
c o n f l i c t s .............................................................. 66
B ritish reco n stru ctio n problems . . . . 68
D esire fo r t a r i f f p ro tectio n by
undeveloped nations . . . ..................... 71
Pear o f U. S . depression . . . . . . . 76
VI. ATTEMPTS AT REGULATION TRADE BARRIERS . . 81
Import d u ties . . . . . . ...................... ♦ 82
Import quotas • • • • • • • • • • . • • 86
Exchange co ntrols • • • • • • • • • • • 92
In v isib le ta r if f s . . • • • • • • • • • 96
V II. LOOPHOLES IN CHARTER..................................................... 103
Exceptions to q u a n tita tiv e
re s tric tio n clause • • • • • • • • • 104
P ro tectio n o f Infant in d u strie s . . . . I l l
S ta te -tra d in g monopolies . • • • • • . 115
In te rn a tio n a l c a rte ls • • ............................... 120
V III. CONCLUSIONS . * . . . ................................................ 125
BIBLIOGRAPHY . . .......................................................................... 132
CHAPTER I
INTRODUCTION
At the end of World War I, the U nited S tates found
h e rs e lf in p o sitio n to play the leading p a rt in the era of
global reco n stru ctio n th a t was to follow . She had become a
c re d ito r nation in the m idst of a h eav ily indebted w orld.
It was u n fo rtu n ate, then, th a t America, a t such an auspicious
tim e, fa ile d to grasp the sig n ifican ce of h er new ly-acquired
position* Trading became in creasin g ly more d if f ic u lt as the
U nited S tates constructed higher and higher b a rrie rs to the
flow of in te rn a tio n a l commerce.
In g en eral, re h a b ilita tio n o f the w orld’s economic
i l l s re ste d squarely in Am erica’s lap . Had she chose to
open h er ports to the exportable goods o f her deb to rs, th ere
would have been a gradual lessening of the adverse economic
pressure bearing down on a l l other c o u n trie s. Productive
cap a citie s throughout the world then, would have found an
expanding market through the mechanics of in te rn a tio n a l tra d e .
I t would be u n fa ir to conclude, however, th at the
d if f ic u lt years th a t follow ed World War I were so lely the
re s u lt of the economic p o lic ies adopted by the U nited S ta te s.
Many European co u n tries, in addition to re ta lia to ry moves
taken ag ain st the U nited S ta te s, e stab lish ed higher t a r i f f
b a rrie rs ag ainst each o th er in an e ffo rt to discourage im­
ports and to encourage ex p o rts. By adding to th is the rap id
spread o f economic nationalism th at developed among the
2
economic nationalism th a t developed among the new ly-created
s ta te s of Europe, one m ight rea d ily id en tify the underlying
forces th a t led to a dim inution of in te rn a tio n a l trade which
brought with i t world-wide depression and fin a lly World
War I I .
The afterm ath of the second world war found the
U nited S tates again as the country most eagerly sought a fte r
for fin a n c ia l aid and lead ersh ip . This tim e, however, w ell-
f o rtifie d with the lessons learned from the p a st, the U nited
S tates government quickly proposed, among o th er th in g s, the
establishm ent o f an in te rn a tio n a l trade organization as a
c e n tra l agency clothed w ith au th o rity to guide an influence
the trad in g nations o f the world.
The ensuing C harter fo r an In te rn a tio n a l Trade Organi­
zation (ITO) was drawn up by rep resen tativ es of 54 cou ntries
during the four-m onth U nited n ation s Conference on Trade and
Employment a t Havana, Cuba, in the w inter of 1947-48.1
This conference clim axed over two years of in ten siv e in te r­
n a tio n al n e g o tiatio n s, by the m ajor trad in g co u n tries, in
preparing the C harter.
The ITO C harter does two th in g s. It e sta b lish e s a
code o f p rin cip le s and ru le s of f a ir dealing th a t coun tries vol
1 Of the 54 co u n tries represented a t Havana, only two,
to d ate, have r a tif ie d the C harter, v iz ., A u stra lia and L ib eria.
3
u n ta rily agree to follow in th e ir conduct of trade with each
o th er. I t creates an o rg an izatio n , composed of a l l govern­
ments th a t accept the C harter, to h elp them carry out these
p rin cip le s and ru le s in actu al p ra c tic e . The basic principle
of the C harter is th a t co u n tries, by agreeing in advance
upon d e fin ite procedures, can work together to solve th e ir
common problems so as to expand world trad e and hasten world
recovery.
The C harter is a means of reg u latin g economic war­
fa re . It was born of pre-w ar experience, when th e many
co untries o f the w orld, with d iffe re n t economic stru c tu re s,
problems and o b je c tiv e s, each attem pted to solve its own
problems reg ard less o f the e ffe c t of its actio n upon the
economy of the others * The re s u lt was economic w arfare th a t
shrunk in te rn a tio n a l trade in the th ir tie s , th a t created
economic d is tre s s and unemployment in many c o u n tries, and
co ntrib uted to the ste a d ily mounting p o litic a l tensions th a t
led , fin a lly , to World ?sfar I I.
The ITO C harter also is an outward expression and
continuation of American foreign commercial policy as i t has
evolved under the wNew Deal” A dm inistration of the la te
P resid en t R oosevelt. In a statem ent issued by Mr. W illoughby,
the close asso c iatio n o f the o b jectiv es of th e Havana C harter
with the p rin cip le s which have guided recen t U nited S tates
4
foreig n economic p o licy is brought into c le a r focus. He
said :
The o b jectiv es o f the ITO C harter epitom izes the
basic p rin c ip le s which have u n d erlain a se rie s of
tr e a tie s , agreem ents, and other in te rn a tio n a l in stru ­
ments to which the U nited S tates has become a party
since the outbreak of World War I I . These p rin cip les
may be found in the A tlan tic C harter of 1941; in the
len d -lease agreem ents; in the a rtic le s o f agreement
of the In te rn a tio n a l Monetary Fund and the In te r­
n atio n al Bank fo r R econstruction and Development in
1944; in the Anglo-American fin a n c ia l agreem ent of
1948; and in various o ther in te rn a tio n a l documents
. . . . They are incorporated in o th er commercial
tre a tie s already in e ffe c t . . . . A ll o f these
documents s p e ll out in clear and unm istakable terms
the d e sire of the U nited S tates to make in te rn a ­
tio n a l trade as unhampered and nondiscrim inatory as
p o ssib le .s
What the proposed ITO means in term s o f b e n efits to
be derived therefrom by the U nited S tates and the re s t of
the world was brought out in clearly -ex p ressed term s by
S ecretary Acheson. In a recent address in which he called
fo r support o f the Havana C harter, he sta te d :
The C harter o f the In te rn a tio n a l Trade O rganization
is thus the beginning of law in the realm of world
commerce and the v eh icle fo r the growth o f a s p ir it
of m utuality and interdependence in trade re la tio n s .
I know of no o th er road to the development o f the
kind of world trad in g system in which the w orldfs
productive energies can be transform ed into the
h ig h est lev e ls of m aterial w ell-being.
^Woodbury W illoughby, 11 Commercial Foreign Policy of
the U nited S ta te s .” U nited S tates Department of S ta te ,
B u lletin (Sept 12, 1948, Ho. 480), p. 325. Mr. W illoughby
Ts C hief, D ivision o f Commercial P olicy, O ffice o f In te r­
n a tio n al Trade P olicy, Department of S ta te .
The C harter o f the In te rn a tio n a l Trade O rganization
is worthy o f the support o f a l l those who believe
th a t peace and progress may be pursued by enabling
the people of the world to secure the means to a
b e tte r l i f e .3
I t is evident from the foregoing statem ents th a t the
proposed ITO is viewed by the makers o f our foreign economic
policy with g reat favor - as an o rg an izatio n th a t can suc­
c e ssfu lly fo ste r and m aintain a system of conducting sane
in te rn a tio n a l a c tiv itie s b e n e fic ia l, in the long run, to a l l
concerned. However, its opponents are not few in number.
Many c ritic s are heard who are anxious to point out its
shortcom ings, ^hey warn us ag ain st becoming too o p tim istic
or e n th u sia stic in our a p p ra isa l of the ITO, fo r i t w ill
only f i l l us with fa ls e hopes as to its capacity to perform
as proponents would lik e to have us b e liev e . In th is con­
n ectio n , Mr. K illh e fe r, who in c id e n ta lly was a member o f the
American delegation a t Havana, had th is to say concerning
the proposed ITO:
Proponents of the Havana C harter are s t i l l talk in g
in the a ttra c tiv e g e n e ra litie s of the prospectus.
But the C harter is the co n tract which e ith e r does
or does not impliment those high hopes. And I say
th a t a c a re fu l study o f the document shows th a t i t
does not do s o .
^Dean G. Acheson, "Economic Policy and the ITO
C h a rte r.” U nited S tates Department of S ta te , B u lletin
(May 15, 1949), p. 627.