midterm paper

Aaron Rodriguez

Management 3080: Business Responsibilities in Society

Frank Cardenas

December 10,2018

Evolution of Free Trade

Since World War 2 the United States has become a global superpower due to their increase in workforce production, their new global presence and military might. They have grown immensely in their military, political influence and most importantly trade. This growth started in the 1930’s  and was not a new phenomena, but after WWII it grew from the exposure. The United States was able to take advantage of the post-war economic climate due to their ramping up of the private sectors for war efforts and their newfound influence on the world. The country had to learn new skills in production, machinery etc. which allowed them to be able to have skills and technologies to create products that were new and innovative to export to the rest of the world. The new post war political influence helped the United States to have a foothold in markets all over the world and create a new global economy. This all started with the Brent Woods Agreement.

In the late 1940’s the United States pictured communist countries as a economic and political “monster” to their way of life. This began to spread to the countries which they had good relations with after the war. During this time some Americans wanted to have a protectionist society because of the dangers they perceived from outside countries. America was going to protect certain industries if they would be seriously damaged.. Roosevelt wanted to create a global economy so he began cutting importing tariffs to friendly nations.The Republicans began to try and halt the cutting of tariffs on the grounds of domestic economic development but Roosevelt assured them these tariffs cuts would not cause harm to the domestic economy.

The Brent Woods Agreement was established in 1944. This was an agreement between The United States, Canada, Western Europe, Australia and Japan. This agreement was the first fully negotiated monetary order. This currency pegged the currencies to gold and also made the U.S. dollar the global standard. In 1947 Truman issued an executive order which would establish the International Trade Commision. Truman also would propose the General Agreement on Tariffs and Trade come into effect the same year on October 30 and come into effect January 1, 1948.  American began to revise multiple trade treaties such as GATT and ITO to reducing “dumping” practices. The United States had forecasted that they would have to establish a new global economy because of their major contribution to the war and make the “economic foundations of peace”. Compared to other economies after WWII they could not be self-sufficient. The United States took up 35% of export share of manufactured goods market. Congress failed to approve the President's request to ratify the ITO and approve the GATT. This new model only favored the United States however, Great Britain wanted to enforce the use of quantitative restrictions to safeguard a country’s balance-of-payments position.The non-discriminatory sections of excluding custom unions,imperial preferences and free-trade areas. During these talks America was still craving to be a protectionist economy due to their fear of communist threatening their way of life.

In 1952 the opening of free trade was all set up to happen, President Eisenhower believed that free trade was important in establishing a free world against communism. Republicans also began to understand that even from their viewpoint that a liberal trading order was preferable.  In the mid-1950’s the people showed that they did not agree with the government. The cotton textile, coal, and petroleum industries sought protection.Eisenhower was looking for the support of these people and in an effort to get their support Eisenhower pressured the Japanese into voluntarily restricting their exports of cotton textiles. This did not appease the cotton textile workers.This lasted until President John F. Kennedy who had to negotiate a deal with Japan. These restrictions on Japan are known as the Trade Expansion Act of 1962. In the late 1960’s  when AFL-CIO supported a general quota bill. Because its leaders believed that the extended unemployment benefits and retraining provisions of the Trade Adjustment Assistance program would greatly ease not only any troubling employment effects of the Kennedy Round tariff cuts but also the job displacement effects of ongoing shifts in the structure of comparative advantage in the world economy. At the same time in 1957 America was working on their relationship with Europe as well. The foundations for the relationship started in 1951. Europe had sought to get rid of ancient laws which restricted trade and this was started with the European Coal and Steel Community between France and West Germany.Italy and the three nations of the Benelux Economic Union–Belgium, the Netherlands, and Luxembourg–soon joined after the treaty was signed. The European Economic Community was established on March 25,1957 from this new want and need for free economic trade through Europe. This economic union was between France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg. The treaty was signed in Rome and took effect in  January 1958. Other organizations were also established to promote free trade like the ECSC and the Eurotom. The EEC, the ECSC, and Euratom were served by a single council of ministers, representative assembly, and court of justice. In 1967 the tree combined to create the European Community.Britain did not join the European Community until January 1973, when Ireland and Denmark also became European Community members. Greece joined in 1981, Portugal and Spain in 1986, and the former East Germany as part of reunified Germany in 1990. From this community came the European Union in 1993 which still stands today. In 2007 there were 27 European Union members and continues to grow. In America in 1970 Wilbur Mills, the chairman of the Ways and Means Committee gave in to the pressures of many of the members of his committee and sponsored a bill by establishing import quotas for textiles and footwear and requiring the president to accept affirmative import relief decisions of the ITC if certain conditions relating to the extent of import increases were fulfilled.

In 1971 the Brentwood Agreement was suspended and collapsed due to its dependency on the dollar. Due to the new economic ties in Europe and the collapse of the Brentwood Agreement an new Global treaty needed to be made and in 1995 the World Trade Organization was founded. The World Trade Organization replace the previous GATT system with 69 governments agreeing to wide-ranging liberalization measures, 40 governments had negotiations for tariff-free trade in information technology products, and 70 members  concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information. In November 2001 in Doha, Qatar the WTO created the Doha Development Agenda which set rules of anti-dumping and subsidies, investment, competition policy, trade facilitation, transparency in government procurement, intellectual property, and a range of issues raised by developing countries as difficulties they face in implementing the present WTO agreements. This round of agreements is still being negotiated and the future of the agreement remains uncertain.

The development of free trade since World War 2 has been fast paced and ever changing. This has caused it to have great progress in creating a post war free trade society. However, there have been some setbacks because of complications in viewpoints or self-interests which have delayed the initiative which was set into motion after the second world war. The world continues to try and break down barriers which are stopping the free flow of products from country to country. In the future hopefully the world can come to agreements to increase trade around the world because this trade will not help the few but help the many by providing much needed jobs, and create new industries in developing countries to help them create a sustainable economy.

Bibliography

Baldwin, Robert E., and Anne O. Krueger. The Structure and Evolution of Recent U.S. Trade Policy. The University of Chicago Press, 1984.

“Common Market Founded.” History.com, A&E Television Networks, www.history.com/this-day-in-history/common-market-founded.

Staff, Investopedia. “Bretton Woods Agreement.” Investopedia, Investopedia, 19 Oct. 2018, www.investopedia.com/terms/b/brettonwoodsagreement.asp.

“WORLD TRADE ORGANIZATION.” WTO | Trade Statistics - World Trade Statistical Review 2017, www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr01_e.htm.