Robert Freeman Smith
Reciprocity in diplomatic negotiations is a process of exchange between nations, a negotiating tool whereby nations bargain with each other for equivalent treatment. It can be either restrictive or open in nature. The restrictive form usually is embodied in a bilateral agreement between two countries and can involve privileges (or different types of treatment) that are denied to other parties, or that must be specifically bargained for by third parties. For the United States, the latter type of quasi-restrictive reciprocity was embodied in the conditional most-favored-nation principle, which was part of almost every commercial treaty negotiated between 1778 and 1922. This was not necessarily an exclusion policy, but it did require continued bargaining after an agreement was ratified, and it could lead to discriminatory practices. The term "restrictive reciprocity" also can be applied to agreements that affect only a limited number of items and leave various prohibitive discriminations intact.
Open reciprocity can be embodied either in bilateral treaties or in multilateral agreements. In general, it means that concessions granted to one nation are automatically extended to all others that have signed most-favored-nation agreements with the granting nation. Since the 1840s (and especially since the British shift to free trade), the unconditional version of the most-favored-nation principle has contributed to open reciprocity. Prior to the development of liberal trade policies, it only tended to generalize discrimination (or guarantee equality of discrimination), and in practice was as restrictive as the conditional version.
Open reciprocity is closely connected to a liberal trading system, with the emphasis on lowering barriers to international intercourse in as broad a manner as possible. Open reciprocity also applies to agreements that tend generally to abolish or modify discriminatory practices rather than provide for the privileged treatment of certain items.
The reciprocity concept has been applied to negotiations over tonnage dues on ships and goods, access to ports and rivers, access to markets, and various types of port fees and internal taxes. Starting in the eighteenth century, reciprocity negotiations also dealt with the equivalent treatment of foreign nationals, especially in matters of religious practice. Since the latter part of the nineteenth century, the meaning of reciprocity has been enlarged to include equal access to raw materials, the protection of foreign investments, aviation over flight and landing rights, treatment of tourists, and a host of financial matters involving such items as exchange controls and debt payments.
If the American concept of reciprocity only involved reciprocity as a bargaining tool, then the historical record would be one of treaty negotiations and little else. But in the historical experience of the United States, reciprocity has been more. It also has been a concept of international relations involving the breaking down of barriers to international intercourse and opposing closed or highly restrictive economic systems. Intimately related to this has been the idea of a peaceful world based upon complete reciprocity, with nations freely exchanging goods, services, and ideas. This conceptual and ideological aspect of reciprocity can be characterized as the open world schema. Bargaining reciprocity can take place, and has done so, on a matter-of-fact basis. But in the experience of the United States, it has been viewed generally as part of the larger world schema, as an instrument to help secure the broader objectives of an open world. There have been periods in American history when this relationship has been obscured or modified, as between 1860 and 1922, but overall the history of reciprocity has been a combination of diplomacy and of concept and ideal. The historical experiences and the cultural heritage of the United States have combined to give a peculiar and unique shape to the history of reciprocity in American foreign policy.
In its original format the concept of an open world of unlimited reciprocity was basically nonimperial. Many prominent leaders in the late eighteenth century broadly viewed reciprocity as rather the polar opposite of power politics, European-style mercantilism, and traditional imperialism. But in the years after American independence, the harsh realities of international politics produced modifications and compromises in the practice of reciprocity. Mercantilistic elements were introduced into American policy as part of the interplay between conflicting sectional and group ambitions and ideas of national interest. Similarly, the open world concept developed a peculiar duality during the nineteenth century. Such elements as the mercantilist idea of the need for economic and social "safety valves," perceptions of external threats, and the messianic thrust of the Redeemer Nation idea (that the United States was chosen by God to remake the world in both a religious and a secular sense) combined in the development of a restrictive and imperial version of the open world. This variant can be labeled the open-door view, and these dual versions of world order have competed and coexisted in American policy-making since the late nineteenth century. Like many historical developments, the reciprocity policies and concepts of the United States have been afflicted by ambiguity and paradox.
The first treaty signed by the infant republic was the Treaty of Amity and Commerce with France in 1778. The preamble to the document stated that equitable and permanent commercial relations between the two countries
could not be better obtained than by taking for the basis of their agreement the most perfect equality and reciprocity, and by carefully avoiding all those burdensome preferences which are usually sources of debate, embarrassment, and discontent;…and by founding the advantage of commerce solely upon reciprocal utility and the just rules of free intercourse, reserving withal to each party the liberty of admitting at its pleasure other nations to a participation of the same advantages.
Writing in 1823, John Quincy Adams declared that this preamble "was to the foundation of our commercial intercourse with the rest of mankind, what the Declaration of Independence was to that of our internal government. The two instruments were parts of one and the same system matured by long and anxious deliberation of the founders of this Union in the ever memorable Congress of 1776." To the younger Adams, "the most perfect equality and reciprocity" constituted the "cornerstone" for the commercial foreign policy of the United States. And, he argued, it was the United States that first proclaimed not only the political ideals of equality and independence but also the "true principles of all fair commercial negotiations between independent states."
Adams may have been indulging in a bit of nationalistic enthusiasm, but he was generally accurate concerning the origins of the American policy of reciprocity and the pioneering role of the United States in promoting a liberal international commercial system. The American concept of reciprocity was shaped by a mixture of the colonial experience and eighteenth-century economic liberalism. During the first three-quarters of the century, the British North American colonies made substantial gains in international shipping. By 1776 they were already a major power engaged in carrying not only domestic goods but also the goods of other nations. In fact, shipping provided a major source of colonial income.
Yankee merchants were not noted for their adherence to mercantilist restrictions on trade. They pushed into the Caribbean and the Mediterranean and to the coasts of Africa, often violating the imperial restrictions of France, Spain, and even Britain. Of course, they enjoyed the privileges of the British Empire even though they did not obey the extra colonial restrictions of the Navigation Acts. In short, the Yankee merchants were breaking down trade barriers by various means prior to 1776, and before Adam Smith put the thoughts on paper, they were firm believers in the liberty to "truck, barter, and exchange." In his Summary View of the Rights of British America (1774), Thomas Jefferson argued that the colonists had a "natural right" to trade freely with all parts of the world. Many of the Founders saw the new nation as a preeminent commercial republic where prosperity and independence would be ensured by the free flow of goods and ships.
The ideas of English liberals and French philosophes reinforced the commercial experience of American colonials and added new dimensions to their concept of international commercial relations. Adam Smith summarized many of these ideas in his book, The Wealth of Nations (1776), but the themes of distribution of labor among nations, comparative advantage, and unrestricted commerce had already been developed by various English and French thinkers. The French Physiocrats argued that the unrestricted flow of goods among the nations would replace power politics and war, since merchants were "citizens of the whole world." Many of the policymakers of the new American republic were quite familiar with these ideas. Economic liberalism in international commerce not only coincided with their concept of the interests of the United States, but also justified the mission of the nation to promote a new system of international relations. Thus, the Founders viewed reciprocity as a bargaining tool and as an integral part of a peaceful, open world order based on equality of treatment and the free flow of goods and ships.
These ideas were first spelled out in the Model Treaty that the Continental Congress adopted in 1776 for purposes of negotiating with France. John Adams drafted the treaty with the assistance of John Dickinson, Benjamin Harrison, Robert Morris, and Benjamin Franklin. He probably was influenced by the writings of Thomas Paine. The latter's Common Sense (1776) had expressed the idea that America's "plan is commerce, and that, well attended to, will secure us the peace and friendship of all Europe, because it is the interest of all Europe to have America as a free port." Adams and the other committee members generally agreed with this proposition and believed that the principles of the Model Treaty would ensure the independent existence of the United States. They hoped that the offer of "perfect" commercial reciprocity would repeal the British Navigation Acts as they affected America, and secure French assistance without involving the nation in the European alliance system. Adams's Model Treaty clearly defined "perfect" reciprocity as complete equality of treatment; France and the United States were to make no distinctions between natives and the citizens of the other country (the doctrine of reciprocal national treatment). This was freedom of trade in the eighteenth-century context, which meant equality of treatment rather than elimination of all duties and dues (the definition that developed in the nineteenth century).
The Model Treaty was a fine declaration of American hopes and aspirations, but it was grounded on an exaggerated idea of the value of American trade to France and other nations. The American principles were stated in the preamble to the commercial treaty of 1778. The French, however, were not willing to grant national treatment; the Americans had to settle for most-favored-nation treatment in the "King's European dominions" and admission to established free ports in the French colonies. French Foreign Minister Charles Gravier, Comte de Vergennes, did add a special proviso that created the conditional version of the most-favored-nation clause. Accordingly, if either party to the treaty granted a special commercial favor to a third party, this favor would not be granted automatically to the other signatory; an equivalent compensation would be required if the third party had paid a price. The historian Vernon Setser has argued that Vergennes added the proviso to demonstrate to the world that France was not demanding special privileges from the United States. This interpretation of reciprocity was added to the treaty without much discussion or analysis.
The negotiations of the French commercial treaty clearly revealed the impact of external circumstances on the American concept of "perfect reciprocity." In addition, they also indicated the role of internal political and economic factors in modifying the use of reciprocity. The original draft contained a reciprocal prohibition on certain export duties; the French would drop export duties on molasses shipped from the West Indies to the United States, and the latter would drop such duties on all domestic products sent to the French islands. A majority of Congress opposed this article, and it was suppressed. This incident was a mild foretaste of future domestic battles over the nature and use of reciprocity.
An independent United States faced an international system in which all the major participants followed restrictive, monopolistic policies. The anticipated trade bonanza did not materialize, and the nation was now cut off from almost all of the formerly lucrative West Indian trade. The closing of the British islands was especially painful. In 1782, John Adams negotiated a commercial treaty with the Netherlands, but the Dutch would agree only to a most-favored-nation clause and not to reciprocal national treatment. The conditional clause was omitted, because its utility had not yet been recognized.
The policymakers of the Confederation government began to realize that their nation's economic and political position allowed it almost no bargaining power. As minister to France, Jefferson realized that the most-favored-nation principle worked to the disadvantage of the nation with the most liberal system. In practice, French traders had almost the same rights in the United States as natives, since the United States had very few restrictions on trade. In contrast, the French controlled the entry of goods, even into free ports, by subjecting trade to the monopolistic control of the Farmers General. This group fixed the quantity and price of goods admitted. The most-favored-nation principle only granted the United States equal discrimination. In 1785, Jefferson launched an attack on the French monopolies with the assistance of the Marquis de Lafayette, but the results were very limited. Indeed, as Representative Elbridge Gerry of Massachusetts noted, under existing circumstances the most-favored-nation principle was a system of "cobwebs to catch flies."
Jefferson realized that in a world of monopolies, the United States had few favors to grant because it had a relatively open economic system. In such a world, commercial restrictions obviously meant bargaining power. During the 1780s, Congress devoted considerable attention to this dilemma, and to the lack of congressional power to enact navigation laws and regulate trade. A special committee reported in 1784: "It will certainly be admitted that unless the United States can act as a nation and be regarded as such by foreign powers, and unless Congress for this purpose shall be vested with powers competent to the protection of commerce, they can never command reciprocal advantages in trade; and without such reciprocity, our foreign commerce must decline and eventually be annihilated."
In the spring of 1785 another committee studied these problems, and its recommendations marked a distinct modification in the concept of perfect reciprocity. The committee noted that without authority to impose restrictions, "reciprocity means nothing and foreign powers may follow what policy they please." It also recommended that treaties were not needed with nations that had no colonies, since the United States must consider giving special advantages in return for some trading rights in the West Indies (and the most-favored-nation principle would prohibit such special advantages).
Various proposals were made during the 1780s to amend the Articles of Confederation or to request the states to provide Congress with more power. The states could not agree, however, and nothing happened. Some states did impose commercial restrictions on their own; but the effect was limited because several states, including Connecticut, took advantage of the restrictions of others by acting as a free entrepôt.
During negotiations with the British in October 1782, Congress formally recognized the use of the conditional most-favored-nation principle as a bargaining device. The draft commercial treaty provided for the reciprocal free navigation of all rivers, lakes, and harbors. Congress insisted that a conditional most-favored-nation clause be added so that other nations would have to "pur-chase them [navigation privileges] by a reciprocal grant." The negotiations for a commercial treaty were dropped, however, when the British issued an order in council closing the West Indies to American ships.
By 1787 a number of American leaders generally agreed that the United States could not obtain any effective degree of reciprocity without a national government possessing the power to regulate commerce both externally and internally. This sentiment was part of the movement for a constitutional convention, and the document produced at Philadelphia reflected the congressional debates of the Confederation government. The new Constitution provided much of the power that the advocates of commercial diplomacy had demanded; the international scene had not changed, however, and, internally, sectional and group interests provided a continuing debate over the exact use of the power.
Generally, the debate took place between two groups. One was led by Alexander Hamilton (secretary of the Treasury) and George Washington, the other by James Madison (a U.S. representative) and Thomas Jefferson (secretary of state until 1793). All of these men agreed that perfect reciprocity was not possible in the world of the late eighteenth century, and that as a result some important modifications would have to be made in the practical uses of reciprocity. They also had retreated from the dreams of a world thirsting for American trade. Most of them still retained some hope that eventually the policies of the United States might lead to an open world of unrestricted trade, but in the interim their main concern was what immediate steps could be taken to ensure the prosperity and independence of the nation. The two groups disagreed significantly not over basic principles, but over tactics and the interpretation of primary interests.
Madison and Jefferson believed that a considerable degree of economic independence could be obtained immediately through a modified system of exclusive reciprocity. They wanted to break the British monopoly on American trade by enacting a navigation law that would favor continental nations and encourage bargaining through discriminatory duties and dues that would affect nations discriminating against the United States. Jefferson explained the need for discrimination in his final report as secretary of state in December 1793. He began by extolling the physiocratic ideals of open trade as the best course for human happiness, then added:
But should any nation contrary to our wishes suppose it may better find its advantage by continuing its system of prohibitions, duties, and regulations, it behooves us to protect our citizens, their commerce, and navigation, by counter prohibitions, duties, and regulations, also. Free commerce and navigation are not to be given in exchange for restrictions and vexations, nor are they likely to produce a relaxation of them.
Jefferson hoped that an initial policy of exclusive reciprocity would eventually produce a system of open trade.
Hamilton considered such a retaliation policy to be a declaration of commercial war against Britain. He was convinced that in the short run the United States should accept economic subordination and British restrictions because import duties, largely derived from trade with Britain, were vital to the economic development of the country. His goal was economic independence through the development of domestic industry. Hamilton and Washington opposed any measures designed to force reciprocity and proclaimed a simple policy of equal treatment for all nations. Thus, they hoped to buy time and not be drawn into European controversies.
The first congressional battle over commercial policy continued from 1789 to 1795. In July and August 1789, Congress passed four acts that laid the foundation for a new commercial system. These were the Tariff of 1789, the Tonnage Act, the act to regulate the collection of duties, and the act for registering and clearing vessels. They provided protection for American industry and shipping but did not discriminate against any foreign country in particular. All foreign vessels were required to pay fifty cents per ton, in comparison with six cents for American ships. A 10 percent discount on customs duties was provided on dutiable goods imported in American ships, a provision changed in 1790, after which merchandise imported in American ships paid the normal duty and a 10 percent surcharge was added to all goods imported in foreign ships. Madison had attempted to add further discriminatory tonnage dues for nations that had not negotiated commercial agreements with the United States. He was not successful then, or in his subsequent efforts to enact retaliatory measures, such as closing American ports to vessels that came from ports closed to American ships.
Jay's Treaty (1794) settled several outstanding questions between the United States and Britain and provided for some reciprocity. Trade with the British Isles was opened on a most-favored-nation basis, and provisions were made for reciprocal trade across the Canadian border. The West Indies remained closed, however, because the Senate rejected the clause providing for a very limited access and a prohibition on exports of certain agricultural products from the United States. Opponents of the treaty claimed that a policy of exclusive reciprocity would have done more to break down the restrictive systems. In his Farewell Address, however, Washington defended the noncoercive method of obtaining reciprocity, which he characterized as "consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing."
Between 1796 and 1815, American leaders did very little about reciprocity. The wars in Europe generally stimulated exports and led to the relaxation of restrictions (especially in the West Indies). Questions of neutral rights and impressment took precedence over matters that appeared less urgent. In fact, Congress refused to act on a reciprocity bill, proposed in 1802, that would have allowed, for any nation that would reciprocate by repealing its similar legislation, the abolition of the discriminatory tonnage dues on ships and the customs surcharges on the produce of the country owning the vessel. Rufus King had negotiated such an arrangement with Britain, and a bill providing for repeal had even been rushed through Parliament.
In 1815 the United States government, in a burst of nationalistic vigor, launched an attack on the restrictive systems of the European states. American leaders were determined to open the world to U.S. shipping and to make reciprocity an effective tool in breaking down the "excluding and exclusive" policy of the old colonial order. The first step was the passage of the Reciprocity Act of 1815. This was the proposal that had been rejected in 1802, and it affected only the direct trade between countries. Several months later, the United States and Great Britain signed a convention that reciprocally abolished all discriminatory duties and dues levied on ships and goods in the direct trade. (This convention was still in force in 2001.) In April 1818, Congress passed a special reciprocity act providing that discriminating duties on goods shipped from the Netherlands would be dropped, not only for goods produced by the Dutch but also for "such produce and manufactures as can only be or most usually are first shipped from a port or place" in the Netherlands. According to this broader principle, national treatment would be accorded all goods that a country normally exported even if they were not produced within that country. In January 1824, Congress extended this principle to Prussia, the Hanseatic cities of Bremen and Hamburg, Sardinia, the dukedom of Oldenburg, and Russia.
In his annual message in December 1825, President John Quincy Adams recommended that the rule of complete reciprocity be adopted, and that all discriminatory duties and dues be dropped for those countries that would do the same for the United States. The origin of goods no longer would be a factor. In the same month Secretary of State Henry Clay negotiated a treaty of complete reciprocity with the Central American Federation. He considered this to be a model treaty and later wrote, "All the shackles which the selfishness or contracted policy of nations had contrived, are broken and destroyed by this broad principle of universal liberality."
By the Marine Reciprocity Act of 1828, Congress gave the president power to proclaim complete reciprocity with all reciprocating nations. In the next few years, this principle was embodied in more than thirty commercial treaties negotiated by the United States. In 1830, Congress repealed the tonnage dues on American ships and offered the same concession to the vessels of any nation that would extend such treatment to American ships.
The attempt to apply reciprocity to the West Indian trade proved to be more difficult. Congress utilized retaliation against the British in the Navigation Acts of 1818 and 1820. The first closed all American ports to British ships that came from ports closed to the United States. The second applied the closing to British ships coming from any colonial port in America, and prohibited the importation of goods from British colonial ports, even in American ships, unless the goods came directly from the producing colony. The latter provision was designed to block the circuitous trade through Bermuda, Nova Scotia, and New Brunswick. The British Parliament offered a liberalization of the West Indies trade in 1822, and the United States relaxed its restrictions by presidential proclamation and by an act of Congress in March 1823. President Adams did not respond to subsequent British offers of relaxation, but President Andrew Jackson accepted these in 1830. As a result, reciprocal trade relations between the United States and the British West Indies (with some exceptions) were established. Negotiations with France and Sweden concerning their West Indian colonies led to reciprocal agreements in 1828 and 1837. The Spanish colonies of Cuba and Puerto Rico had been closed officially, but the regulations were not enforced. In 1830, Spain accepted a United States consul for Cuba, and trade between the United States and Cuba increased.
Official U.S. attitudes and policies toward the newly independent nations of Latin America were part of the same ideological structure that produced the reciprocity system. John Quincy Adams stressed this in 1822 when he informed Stratford Canning, the British minister to Washington, that the "liberation of the Spanish colonies would mean the end of exclusive commercial policies everywhere." The Latin American policy of the Monroe and Adams administrations was aimed at establishing reciprocity as a key element in inter-American relations, and preventing the reestablishment of the old colonial order of economic mercantilism and political authoritarianism. In May 1823, Secretary of State Adams stressed the U.S. policy "to counteract the efforts which it cannot be doubted European negotiations will continue to make in the furtherance of their monarchical and monopolizing contemplations." In regard to Latin America he noted, "The only object which we shall have much at heart in the negotiation [on commercial relations] will be the sanction by solemn compact of the broad and liberal principle of independence, equal favors, and reciprocity." In addition, Adams hoped that the principle of complete national treatment of foreigners would be established in the hemisphere, and that all discriminating duties would be abolished.
To Adams and Monroe, the open world was to be established first in the Western Hemisphere. And the Monroe Doctrine was, in part, a general declaration of these aspirations. Commercial freedom was an important part of the American rivalry with the European system, but the authors of the Monroe Doctrine envisioned the "American system" in a broader sense. As Adams pointed out in his policy statement of May 1823: "Civil, political, commercial, and religious liberty, are but the various modifications of one great principle, founded in the unalienable rights of human nature, and before the universal application of which the colonial domination of Europe over the American hemisphere has fallen."
During the 1820s and subsequently, the gap between power and aspirations would limit the efforts of the United States. During the 1820s, treaties embodying commercial reciprocity were negotiated with Colombia and Brazil, but economic liberalism in the hemisphere would not become a widespread reality for more than a century. Adams and Monroe did, however, proclaim the integral nature of reciprocity, the open world, and a Western Hemisphere independent of the European colonial system.
By 1830 the American push for commercial reciprocity was bringing results, and discriminatory barriers to trade were falling rapidly. In fact, the Western world was entering a period of widespread commercial liberalism. Leading British statesmen were pushing for reciprocity and for the general elimination of customs duties. The British Corn Laws were repealed in 1846, the Navigation Acts were abolished three years later, and the Cobden-Chevalier Treaty of 1860 with France greatly stimulated free trade in Europe. During this period the meaning of free trade was expanded to encompass the elimination or reduction of all tariffs on goods.
With a few exceptions, the United States participated in the trend that it had helped to promote. Tariff rates generally dropped after 1832. The "Black Tariff" of 1842 was highly protective, but the Walker Tariff of 1846 dropped the rates, and the Tariff of 1857 pushed them even lower. In his 1845 report, Secretary of the Treasury Robert Walker identified "reciprocal free trade" with low duties and argued that such a policy "would feed the hungry and clothe the poor of our fellow-men throughout all the densely peopled nations of the world." The Democratic Party pushed for lower duties, and the platform of 1856 pledged the party to a policy "in favor of free seas, and progressive free trade throughout the world." One of the Democratic Party's main areas of strength was the agricultural South, and farmers opposed protective tariffs because they raised prices on the manufactured goods they purchased. During this period, many large industries wanted protection from foreign competition and the Republican Party favored industry over agriculture.
The United States–Canadian Reciprocity Treaty of 1854 constituted a milestone in this expanded definition of reciprocity, establishing almost complete free trade in natural products between the two countries. It also provided for the joint use of the Atlantic coast fisheries and for reciprocal transit rights in canal systems, the St. Lawrence River, and Lake Michigan.
During this period another version of reciprocity and the open world began to emerge. This was the right and duty of the "Christian nations" to force closed states to trade and to accept the Western system of commercial rights. John Quincy Adams praised the British during the Opium War with China for forcibly upholding the natural right of free commerce among nations. According to Adams, the "righteous cause" of Britain was not opium but the principle of "equal reciprocity." He also hoped that the peace treaty would establish future trade with China "upon terms of equality and reciprocity." Perhaps Adams and others did not necessarily envisage the system of rather unequal treaty relations that developed after the 1840s, but he had completely accepted the idea that the Western nations had the right and duty to force the "backward," or non-Christian, nations to accept the Western presence and systems. During these years, however, the open-door version of reciprocity was still in its infancy, and very limited in its application.
The United States followed Britain in the opening of China and took the lead in opening Japan. In the process, Americans altered the interpretation of reciprocity. As in commercial treaties with Morocco (1836) and Zanzibar (1837), the treaties with Japan (1854) and China (1858) provided unconditional most-favored-nation treatment for the United States in those countries. However, the United States did not give most-favored-nation treatment in return. In addition, China and Japan accorded the United States the privilege of extraterritoriality, which meant that in many cases Chinese and Japanese laws did not apply to Americans. The United States did not grant reciprocal privileges because American officials did not regard reciprocity in "backward" nations as a two-way street. The United States did continue to stress the principle of equality of treatment for all foreign interests.
After 1860 the United States moved into a period of increasingly high tariffs. At the same time, the American economy became much more diversified, encompassing both commercial agriculture and industry. Various groups within these sectors disagreed on market priorities and the need for a protective tariff. This conflict carried over into political debates and made the tariff one of the primary political issues of the period. For the most part, the Republican Party supported high tariffs and the Democratic Party campaigned for reduction. Both, however, reflected the diverse nature of the economy and the concomitant effect on tariff views. As a result, most tariff acts were complicated bundles of regional, group, and political demands. Some free trade sentiment continued. In Free Land and Free Trade (1880), Samuel S. Cox argued that "under its benignant influence, the enmities, wars and brutalities of men will yield to concordant reciprocity." The physiocratic ideal had slipped on the American value scale, however, and the dominant protectionist group stressed national independence based on the home market. They agreed that world peace and internationalism were fine aspirations, but decidedly unrealistic in a world of nation-states. The reductionists wanted low tariffs but not free trade. Another group emerging in the 1870s stressed a limited form of reciprocity as a compromise between absolute protectionism and reduction, thus reflecting a combined interest in some home market protection and a vigorous push for foreign markets.
Internationally, protectionism surged during the late 1870s and 1880s. Ironically, American economic strength contributed to this reversal. The Bismarck tariff of 1879 reflected the desertion of free trade by the German agrarian conservatives in the face of American competition. The protective push was renewed after 1902, except for Britain.
Reciprocity underwent changes after 1860 in response to new priorities and interests. A rigidly exclusive version of reciprocity was utilized. American officials sought preferential agreements and special privileges, especially concerning customs duties. As a symbol of this trend, the nonexclusive Canadian Reciprocity Treaty was abrogated in 1866.
Reciprocity was also used to secure political advantages for the United States as part of exclusive economic arrangements. The first political use of reciprocity came in 1875 with the Hawaiian Reciprocity Treaty. The Hawaiians gave the United States special economic privileges that were denied to other nations, and in return Hawaiian sugar was given preferential treatment in the United States market. In addition, the Hawaiian government agreed not to make any territorial grants or to lease ports to other powers. The British protested that this treaty violated their most-favored-nation agreement with Hawaii, but the United States replied that this was a "special and extraordinary" case arising from "geographical and political reasons." This was the beginning of a limited United States imperial preference system that after 1900 was extended to Cuba, Puerto Rico, and the Philippine islands (the latter two by act of Congress). When the renewed treaty was ratified in 1887, the United States received exclusive rights to the use of Pearl Harbor. The Cuban Reciprocity Treaty of 1902 had been promised by Secretary of War Elihu Root to the members of the Cuban Constitutional Convention in order to secure their acceptance of the Platt Amendment. The treaty provided more privileges for Cuba in the American market than the United States received in Cuba. However, American officials believed the treaty would ensure Cuban prosperity and the strengthening of American influence by peaceful means.
During the 1870s the administration of Rutherford B. Hayes considered other reciprocity treaties, but only the Hawaiian treaty reached completion. In the early 1880s, Secretary of State James G. Blaine became a vigorous proponent of reciprocity as a means of opening markets, especially in Latin America, and broadening the domestic support of the Republican Party. Blaine initiated talks with Mexico, which were completed in 1882 by his successor, Frederick T. Frelinghuysen. The latter, with the support of President Chester A. Arthur, also started negotiations with the Dominican Republic, Spain (for Cuba and Puerto Rico), El Salvador, Colombia, and Great Britain (for the West Indies). Treaties were negotiated with the first two in 1884, and both emphasized tariff reductions or eliminations for American manufactured goods. The Mexican treaty also gave the United States a privileged concession by eliminating Mexican interstate taxes on American goods.
Rigid protectionists stalled consideration on these treaties. The Senate approved the Mexican treaty but added a proviso calling for enabling legislation by the House. This was not given, and the treaty lapsed. President Grover Cleveland withdrew the Spanish and Dominican treaties, and ended the other negotiations.
Blaine returned to the State Department and the reciprocity struggle in 1889. One of his first efforts was to push for a customs union at the Conference of American States (1889–1890). The Latin American states did not approve such a bold and exclusionary move, but they did recommend the negotiation of individual reciprocity treaties.
Blaine then began a campaign to have reciprocity bargaining powers included in the tariff bill being drafted by Congress. After much maneuvering, Congress finally included in the McKinley Tariff of 1890 a provision for a very restricted penalty method of bargaining. Sugar, molasses, coffee, tea, and hides (the "tropical list") were placed on the free list. The president was given the power to restore these items to the dutiable list for any country that had duties on American products that "he may deem to be reciprocally unjust or unreasonable." In addition, the president was given the power to negotiate reciprocity treaties with countries to bind the specified items on the free list. These did not require Senate approval. In 1891 and 1892 the United States concluded such agreements with ten countries. Eight treaties concerned the Western Hemisphere, and seven of these involved nations or possessions in the Caribbean and Central America. Penalty duties were imposed on three Western Hemisphere nations when they refused to make concessions.
The Wilson-Gorman Tariff of 1894 did not include bargaining provisions and undermined the agreements by reimposing the duty on sugar. Subsequently, the Republican Party, with some internal dissent, adopted reciprocity as a compromise position designed to secure the principle of protective tariffs yet give some consideration to groups arguing that the country had to build up foreign trade. "Protection and Reciprocity are twin measures of Republican policy and go hand in hand," the platform of 1896 declared. William McKinley became president in 1897 and immediately pressed Congress for a new tariff act that would ease the protective system and modify the policy of exclusive reciprocity.
The Dingley Tariff of 1897 increased duties but provided for three types of reciprocity treaties. The first was a limited version of the 1890 penalty-bargaining section. The new tropical list of free items consisted of coffee, tea, tonka beans, and vanilla beans. The only treaty of any consequence negotiated under this section was a reciprocity agreement with Brazil in 1904. Brazilian coffee remained on the free list (more than 50 percent of the crop), and the Brazilian government gave a 20 percent reduction on many American products.
The second and third types of reciprocity bargaining reflected the administration's growing concern over trade with Europe and the retaliatory measures enacted by countries such as France. These sections of the tariff act provided for concessionary bargaining. The second type authorized the president to negotiate agreements with countries exporting argol (crude tartar used in winemaking), brandy, champagne, all other sparkling wines, vermouth, paintings, and statuary. If "reciprocal and equivalent concessions" were given to American goods, the president was empowered to grant specified lower duties. The McKinley administration concluded four of these "argol agreements," and the administration of Theodore Roosevelt signed nine more. None of these had any significant effect.
The third type of bargaining provision marked an important modification in the system of exclusive reciprocity and had some potential for trade liberalization. It authorized the president to negotiate reciprocity treaties that could lower duties up to 20 percent on all goods. He also could negotiate the transfer to the free list of goods not produced in the United States. However, such treaties would have to be approved by both houses of Congress and would have five-year limitations.
President McKinley had appointed a reciprocity commission in 1897, under the leadership of John Kasson. This commission negotiated the treaties authorized by the tariff act, and thirteen of these (called the Kasson treaties) were under the provisions of the third section of the act. The treaty with France was the most significant, since it shifted most American products to the minimum schedule. However, the protectionists in Congress would not accept the Kasson treaties, realizing that the executive branch was proposing an important step toward open reciprocity concerning customs duties. In 1901, McKinley took the reciprocity fight to the public. In his last speech, at Buffalo, New York, a few hours before his assassination, he declared: "The period of exclusiveness is past. The expansion of our trade and commerce is the pressing problem…. Reci procity treaties are in harmony with the spirit of the times; measures of retaliation are not."
McKinley's death took much of the drive out of the reciprocity movement. The National Reciprocity Convention was held in November 1901, under the auspices of the National Association of Manufactures, and the National Reciprocity League was organized in 1902. Neither had any effect on congressional protectionists, and the executive branch under Theodore Roosevelt did not press the issue. As a result, the treaties failed, but a pattern had developed that still characterizes the reciprocity struggle. Leadership for trade liberalization through reciprocity would come from the executive branch and would encounter resistance from a Congress representing diverse interests.
The Payne-Aldrich Tariff of 1908 repealed all of the reciprocity agreements made by the Kasson commission. It did, however, mark a slight shift in bargaining objectives from special concessions to equality of treatment. The act set minimum rates and provided for penalty rates in cases of undue discrimination.
The reciprocity movement revived during the administration of William Howard Taft because of various political and economic factors. Taft, under considerable pressure to revise the tariff, believed that some limited reciprocity was needed to save the protective system. Canada seemed to offer several advantages for such a move, and a reciprocity treaty was negotiated in 1911. Newspapers rushed to support the treaty because of the provision for free admission of paper and wood pulp. The U.S. Congress approved the treaty, but it was rejected by the Canadian Parliament.
The Democratic-sponsored Underwood-Simmons Act of 1913 provided for a significant lowering of the tariff and the elimination of penalty bargaining. One section authorized trade agreements containing reciprocal concessions, but none were negotiated. The act also contained a peculiar reversion to the 1790s: lower duties for goods imported in American ships, unless existing treaties prohibited the discrimination. World War I soon obliterated all questions of reciprocity and bargaining, and the negotiating potential of the act was never tested. Protectionist pressures mounted after the war, leading to the Emergency Tariff Act of 1921.
Reciprocity as part of a concept of world order was a limited and inconsistent part of the open-door concept that reached maturity in the 1890s. Equality of opportunity and nondiscrimination tended to be applied to competition with other industrial powers in Asia and Africa, areas where American power was limited. In its new colonial empire the United States enforced a discriminatory commercial system and, despite the open-door rhetoric, the government made some efforts to achieve a privileged position in various Latin American countries. The effects were limited to the Caribbean and Central America. The administration of Woodrow Wilson tried to expand the Monroe Doctrine to include the restriction of European economic activity in these areas.
American officials also used the arguments of equality of opportunity and nondiscrimination to justify the "right" of Americans to invest in underdeveloped countries and have access to their raw materials. In some cases they defended this position by citing reciprocity. When the Mexican government attempted some regulation of foreign oil companies after the adoption of the constitution of 1917, State Department officials argued that such action violated the principle of reciprocity, since Mexican capital in the United States was not subject to discriminatory treatment. For Mexico and other underdeveloped countries, this was a hypothetical argument, since there was little if any Mexican capital invested in the United States.
Revolutionary nationalism, with its concomitant policy of control or elimination of foreign investments and properties, first emerged during this period. The United States and other industrial-creditor nations attempted to meet the challenge with a special definition of openness that implied a limitation on the sovereignty of the expropriating or regulating nations. How far would the United States go, and what means would it use, to enforce the open door? This question dogged American policymakers throughout the twentieth century. The results were mixed, and even ambivalent, as a result of changing circumstances and interpretations of national interest.
Part of the ambiguity was caused by the revival of the noncoercive, open world view. The peace movement prior to 1914 sought some type of world order beyond the open door. And, paradoxically, Woodrow Wilson in his Fourteen Points described a partial vision of an open world with the "removal, so far as possible, of all economic barriers, and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance." To some Americans, the League of Nations seemed to promise the establishment of an open world order. Although a mixed opposition prevented United States entry, various Americans continued to try to implement peace and reciprocity by other means.
After World War I the nations of Europe began to assert a greater degree of economic nationalism. The unconditional most-favored-nation clause that had generalized bilateral tariff negotiations before the war was not effectively rehabilitated. After 1930 the Great Depression accelerated these trends, and a wide variety of new discriminatory economic tactics emerged. These included exchange controls, quotas, internal taxes on foreign goods, and the creation of vast preferential trading systems. The British created the imperial preference system in 1932, and Germany developed a similar structure using barter and a special currency that could be exchanged only for German goods.
Subject to the same pressures, the United States also exhibited some protective reactions. In the Fordney-McCumber Tariff Act of 1922 and the Smoot-Hawley Tariff Act of 1930, Congress pushed the tariff to the highest levels in American history. In 1920, Congress attempted to restrict the entire commercial treaty system by "authorizing and directing" the president to scrap the existing treaties and thereby reimpose discriminatory tonnage duties on foreign ships. During the 1930s, Congress authorized import quotas on agricultural products, and imposed these in some cases. It also levied excise taxes on imports.
Paradoxically, the executive branch began gradually and sporadically to move against the prevailing trends and toward a revitalization of equality of treatment and reciprocity. By the latter half of the 1930s, the United States had emerged as the leading (and perhaps only) exponent of an open world commercial system.
All of the Republican administrations of the 1920s refused to implement the act providing for merchant marine discrimination. The Tariff Commission under William S. Culbertson launched a campaign to revitalize reciprocity by shifting the United States to the unconditional most-favored-nation principle. President Warren Harding and Secretary of State Charles Evans Hughes accepted the argument that the conditional principle had produced "discriminatory reciprocity" and implemented the change. The tariff acts of 1922 and 1930 contained elastic clauses, advocated by the Tariff Commission, that authorized the president to raise or lower duties by 50 percent on a nondiscriminatory basis (that is, if the duty was reduced on an item, the reduction would apply to all nations, regardless of treaty status). This was not implemented because of the political conflicts involved.
The administration of Franklin D. Roosevelt divided into two factions over the issue of economic nationalism, and followed a vacillating and even contradictory policy for several years. The home market group, led by George Peek of the Agricultural Adjustment Administration, wanted import quotas and bilateral barter deals. In 1933 this group seemed to be winning the internal power struggle, especially when Roosevelt under-mined Secretary of State Cordell Hull's liberalization efforts at the London Economic Conference.
Hull was the leader of the trade liberalization group. In many respects, he and other officials of the period were intellectual descendants of the philosophes, who believed that an open world based upon reciprocity in all areas was the only prescription for a peaceful world. The international scene of the 1930s provided a powerful argument for this position. Hull believed that economic nationalism had produced the collapse of the world economy and was continuing to provoke a vicious cycle of economic retaliation, militarization, and a struggle for privileged positions that could end only in war. In the last analysis, it was a struggle between open and closed economic systems, and between freedom and tyranny. The two were indivisible.
Hull's position gradually, and with some difficulty, gained ground after 1933. The victories were limited and mixed with contradictory elements. The first breakthrough came with the passage of the Reciprocal Trade Agreements Act in 1934. This amendment to the tariff act of 1930 was a tactic that avoided a congressional battle over consideration of the entire tariff schedule. The president was empowered to conclude bilateral trade agreements that reduced duties as much as 50 percent. All such treaties were to incorporate the most-favored-nation principle, which was broadened to include negotiations over internal taxes, import prohibitions and quotas, and exchange controls. All treaties, however, were to contain the "Cuban exception" clause (allowing preferential treatment) and an "escape" clause.
Between 1934 and 1945 the United States concluded twenty-seven treaties, and tariff rates were reduced on average by 44 percent of their base rate. Hull's efforts to eliminate other forms of discrimination produced mixed results, and his attack on the British imperial preference system was shelved during World War II. Hull also used the reciprocity argument in demanding "equi-table" treatment for U.S. interests in Latin America, arguing that the Good Neighbor Policy of the United States required reciprocal behavior. However, the administration did relax the insistence on extraterritorial rights, as evidenced by U.S. policy toward Mexico's expropriation of the oil industry in 1938.
Planning for the postwar world by American officials cannot be comprehended adequately without an understanding of their intense belief, even to the point of obsession, that the United States must lead the way to an open world or face another cycle of depression and war. At times the intensity of this belief blinded them to other factors and produced a self-righteous image of the purity of American policies. The fears and ideological fervor engendered by the Cold War complicated and confused the push for an open world. In the years after 1945 many of the ideas and impulses associated with the imperial, open-door concept were reasserted, to coexist and compete with the open world view.
American officials wanted to make reciprocity an integral part of the postwar world order. Many hoped that the United Nations would lead the way in eliminating spheres of interest. In addition, the United States helped to create the International Monetary Fund and the International Bank for Reconstruction and Development as means to restore multilateralism and nondiscrimination in international economic relations.
In 1947, twenty-three nations took another important step toward a liberal trading system by concluding the General Agreement on Tariffs and Trade (GATT). This agreement provided for multilateral reciprocity and included a code for fair trading in international commerce. In 1948, the U.S. Congress refused to ratify a charter that would have institutionalized GATT in the International Trade Organization, because Congress opposed the creation of an international body that would exercise control over U.S. trade policies. But GATT has survived through periodic conferences. By the 1970s, eighty nations accounting for more than 80 percent of total world trade had joined. In 1963 the national representatives of GATT relieved the underdeveloped nations within the system of the necessity to reciprocate fully for concessions granted by the more developed countries.
Since 1945 Congress has periodically extended the president's bargaining power and authorized additional reductions in the tariff. However, protectionist sentiment has moderated reciprocity and preserved some areas of discrimination. A "United States exception" clause was added to the GATT charter, in deference to American desires to retain import quotas on some agricultural products. In the 1950s, Congress also directed the president to place import quotas and embargoes on various products in the interest of national security. Oil import quotas were imposed in 1959, and during the 1950s similar restrictions were applied to such goods as Gouda cheese, safety pins, and dental burs.
Cold War antagonisms also produced some retreat from complete reciprocity. In 1950 the United States placed an embargo on all trade with the People's Republic of China and North Korea, and most-favored-nation status for the Soviet Union and other communist nations was withdrawn in 1951. In 1960–1961 the government proclaimed an embargo on all trade with Cuba and tried to obtain European and Latin American cooperation; even to the point of blacklisting ships going to Cuba and forbidding them entry into United States ports. In August 1975 the Organization of American States abolished the "paper" embargo against Cuba. Subsequently, the United States eliminated the blacklist and other sanctions imposed on nations trading with Cuba. In May 1977, President James E. Carter began the process of restoring trade relations by authorizing Cuban purchases of food and medicine.
In August 1971, under mounting economic pressures, President Richard M. Nixon took several steps that seemed to imply a retreat from reciprocity and a shift to a decidedly nationalistic policy. The president suspended the convertibility of the dollar into gold, imposed a surcharge on imports and export quotas on soybeans, and threatened quotas on textile imports from Asia. Paradoxically, in June he had lifted the embargo on trade with China and removed some restrictions on wheat, flour, and grain shipments to the Soviet Union and Eastern Europe.
Subsequently, President Nixon removed or modified the restrictions imposed in 1971 and requested authority from Congress to enter a new round of GATT negotiations. In December 1974, Congress finally passed the Trade Act of 1974, an extensive bill that clearly revealed the duality of American policy. The Japanese described it as a "two-edged sword." The act gave the president broad new powers to bargain away various tariff and nontariff trade barriers, but it also provided for several retaliatory actions against "unfair trade practices." In the area of nontariff barriers, the president could negotiate pacts guaranteeing access to the products of other nations (with congressional approval required). This would allow the United States to enter a world food reserve program.
However, the president for the first time was given explicit authority to raise tariffs and tighten import quotas to deal with balance-of-payments deficits and import competition problems. The act also provided duty-free treatment (with some items excluded) for about one hundred underdeveloped nations, but the preferences were denied to nations enforcing export embargoes against the United States (aimed especially at those belonging to the Organization of Petroleum Exporting Countries) and not cooperating on expropriation and drug matters. Most-favored-nation treatment was authorized for communist nations that permitted free emigration (earlier acts had extended the principle to Poland and Yugoslavia). In 1975 most-favored-nation treatment was extended to Romania. The Soviet Union objected to the emigration provisions and withdrew the trade agreement (with most-favored-nation status) that had been negotiated earlier.
After eight rounds of GATT negotiations, this regime was finally transformed into the World Trade Organization in 1995. During its lifetime, average tariff rates on industrial products had been lowered from 40 percent in 1947 to 4 percent by the early 1990s. Although every U.S. administration supported liberalized trade, in fact, Cold War diplomacy took precedence over reciprocity until the 1990s. U.S. leaders tended to take a soft line when its allies or trade partners were less than faithful in this area.
Congress in 1974 renewed for five years the president's trade negotiating authority and established the fast track authority for considering trade legislation. The president promised regular consultation, and Congress gave up the right to amend any trade agreement and agreed to consider any agreement within ninety days. In this act Congress emphasized reciprocity with developed nations ("the harmonization, reduction, or elimination of devices which distort trade or commerce"). Congress, however, stated that it would not insist on full reciprocity for developing countries.
The seventh GATT (Tokyo) round of negotiations began in 1973 and lasted until November 1979. These negotiations stressed nontariff barriers for the first time. In many cases these had become more important than actual tariffs. Among other factors, health and safety regulations were quietly used to limit imports. The members approved a series of specialized, nontariff codes pertaining to countervailing duties, antidumping duties, subsidies, product standards, import licensing, and government procurement. Relatively few countries signed these codes, and a decade later the six nontariff codes had little effect outside of the European Community, the United States, and Japan.
After 1975 the U.S. trade deficit began to grow rapidly. In 1975 the United States had nearly a $1 billion surplus in trade with Asia, but by 1987 this had changed to a $101 billion deficit. During the 1980s, U.S. attempts to promote free trade and reciprocity faced difficult times. The administration of Ronald Reagan imposed some import restraints for steel, motorcycles, semiconductors, and automobiles. In the latter case, strong hints that Japan needed to head off congressional action led to voluntary limitations. Although Japan lowered its tariffs significantly after the Tokyo Round, foreign manufactured imports were impeded by restrictive marketing customs and through a combination of cultural loyalties and administrative guidance.
The Reagan administration also began a two-track approach to liberalizing trade. It urged GATT members to begin negotiations to expand the Tokyo Round Codes and it developed a bilateral approach to free trade agreements (FTAs). Such an agreement was signed with Israel in 1984 and Canada in 1987. The latter provided for some integration of the two economies. All tariffs and nontariff barriers were to be eliminated by 1998, and in the agricultural area all tariffs were to be eliminated during a ten-year period and nontariff barriers would be reduced. Several major controversies and legal challenges have developed in the agricultural area. To complicate matters, each nation continued to enforce its own antidumping and countervailing duty laws to imported goods. Publishing and communications were excluded from the nontariff provisions because of the Canadian policy of "protecting" its cultural heritage. Financial services were not included in this agreement.
President George H. W. Bush pushed for a trilateral free trade agreement with Canada and Mexico. This North American Free Trade Agreement (NAFTA) was signed in October 1992. Two of the most important elements were the investment provisions and the mandatory dispute settlement. Foreign investors, for the most part, received national treatment and various other safeguards. President Bill Clinton supported NAFTA despite heated opposition from labor unions and his own party. He negotiated limited side agreements concerning labor and environ-mental issues but a majority of House Democrats voted against NAFTA. Businessman and 1992 presidential candidate Ross Perot predicted a "great sucking sound" of jobs moving south of the border.
Economic historian Alfred E. Eckes, Jr. has written an overall summary of the FTAs. He notes:
Interestingly, the FTA's with Israel, Canada and Mexico (NAFTA) represented significant departures from U.S. commitment to the multilateral GATT process. FTA provisions digressed somewhat from the principle of nondiscrimination, but arguably they complemented the overall objective of liberalizing trade in that bilateral FTA's sought to address specific issues not handled successfully in the GATT forum—agriculture, services, investments, intellectual property, and other non-tariff issues.
One of the most controversial aspects of NAFTA has been the binational panel process to revise the application of antidumping and countervailing duties. One of the three-member panel's first decisions was to reverse the U.S. Commerce Department's subsidy determination. It was later revealed that two of the Canadians on the panel had business and government connections that compromised their neutrality. A U.S. judge ruled that the process was flawed under U.S. law and ordered Canada to negotiate restraints on its softwood lumber exports to the United States. Some authorities believe, however, that the binational panels have been effective in "relatively routine" cases.
In early 2001 the United States and Mexico clashed over a Clinton administration refusal to allow Mexican trucks full access to U.S. high-ways—they were limited to a twenty-mile zone north of the border where they had to transfer their loads to U.S. trucks. A NAFTA arbitration ruled that the United States had violated the treaty. In May 2001 the U.S. government issued revised rules to meet the arbitration panel's ruling. Under the new rules, all Mexican trucks that operate in the United States must apply for permission and their companies must provide detailed information about their safety practices and show that they are in compliance with U.S. trucking regulations.
The United States and Canada were at odds over a U.S. ban on the import of potatoes from Prince Edward Island, on the grounds that potato wart fungus had been found in a field on the island. Canada referred the issue to NAFTA negotiations.
In April 2001 newly elected President George W. Bush provided the leadership for a Free Trade of the Americas initiative called Super NAFTA. A three-day summit meeting of hemisphere leaders in Quebec, Canada, hoped to out-line a free trade zone that would wipe out most trade restrictions by 2005. If it comes to fruition it will be the greatest advance for reciprocity in the history of the world. The leaders ratified a plan barring undemocratic nations from the free trade zone. The so-called democracy clause would suspend the benefits of the free trade zone from any country that ceases to be a democracy. Cuba was the only nation excluded from the summit because of its totalitarian regime. An odd amalgamation of anarchists, communists, labor activists, environmentalists, New Agers, and others took to the streets in violent protests against free trade and capitalism in general. President Bush noted that he was willing to discuss their grievances, and in his address to the meeting, he stated that the proposed agreement had to be accompanied by a "strong commitment" to protecting the environment and improving labor standards. Brazilian President Fernando Henrique Cardoso pledged to push for "trade openings that are reciprocal and [to] help close rather than widen the disparities in our region."
The eighth round of GATT talks (the Uruguay Round) began in 1986. In 1984, 109 nations signed a new agreement to create a World Trade Organization to replace GATT and implement the last GATT accord. This final accord, in December 1993, cut overall import duties by about 40 percent, phased out import limits that made clothing and textiles more expensive, scaled back (but did not end) state support to farmers, boosted protection for copyrights and patents, and set new rules to help liberalize trade in services such as tourism. Separate accords also covered government contracts, dairy products, and beef. The World Trade Organization was given enforcement authority. In January 1995 the new accords became official.
For the next two years the WTO did very little and negotiations to extend free trade failed. In December 1996 a conference of ministers from 128 nations finally agreed to sweep away customs duties on computers, software, semiconductors, and hundreds of other information technology products by 2000. Significant progress in telephone services negotiations was also made.
The mandatory dispute settlement provision has created a problem for the United States. In the WTO it has one vote, while the European Union, which negotiates as a bloc, has fifteen separate votes. And developing nations have 83 percent of the votes. But this disparity does not seem to have had serious consequences for the United States to date. In late 2000 the General Accounting Office testified that out of forty-two cases involving the United States as a plaintiff or defendant, America had won fourteen and lost eight; the remaining cases were decided through negotiation.
But in some areas reciprocity continues to take a beating. The European Union has set up trade barriers to U.S. beef produced with growth hormones and to bananas grown on American-run plantations in the Caribbean and Central America. In turn, the United States retaliated with $116.8 million in trade sanctions on a range of European goods. Negotiations in late 2000 failed. The EU did relax its ban on genetically modified organisms. This prepared the way for an end to Europe's moratorium on bioengineered seeds and food. But debates continued over the role of government subsidies in protecting industries. The United States pointed to British, French, and German low-interest loans to Airbus Industries in its efforts to build a rival to Boeing's jumbo jet. The French demanded the right to protect their film industry from U.S. competition and to extensive agricultural subsidies. In turn, the Europeans complained that the United States also provided massive support to farmers and used restrictive quotas and high tariffs to protect sectors such as sugar, peanuts, and tobacco.
Another complicating factor in reciprocity negotiations is the demand by labor unions, environmentalists, and leading Democrats that any agreements must include worker protection and environmental concerns. Robert Zoellick, the Bush administration's trade representative, argued that free trade should be about free trade and nothing else. According to Zoellick, "the WTO should not be seen as a global government with power to order new environmental or labor laws—or, for that matter, better tax regimes, pension plans, health programs, civilian control of militaries, or a host of other meritorious outcomes."
Trade with the People's Republic of China was an ongoing problem. For years the U.S. Congress annually reviewed China's trade status before voting on renewing most-favored-nation status. In 2000 the Clinton administration pushed to make this status permanent and even changed its name to "permanent normal trade relations." Under the terms of the new agreement, China consented to cut tariffs and restrictions on American agriculture, industrial products, banking, insurance, telecommunications, and movies. The United States agreed to accept Chinese membership in the WTO and give up its annual review of China's trade status. The opponents argued that with this deal the United States gave up its efforts to influence China's human rights policies. But in past annual reviews, the United States had never done anything except lecture the Chinese government. A new antidumping law took effect in 2001. Under its provisions, any company that proves it was harmed by "unfair competition" will be given protection by a special antidumping duty. The proceeds from this duty will be paid to the companies involved. For example, on behalf of the Diamond Sparkler Company, the U.S. government imposed a 93.4 percent import tax on Chinese sparklers. It is estimated that $100 million will be collected in 2001 as a result of all such special duties. The steel industry dominates the list of companies in line for the payments, with 46 percent of the 360 cases preliminarily qualified for payment.
According to the law, the funds received by each company can be used only for training, new technology, health benefits, pensions, and other specific items. That leaves the Customs Service with the problem of determining whether the funds are spent legally. Thus, the problem of "unfair competition" continues to plague reciprocity.
As of 2000, the European Union, Japan, Australia and several other countries had filed complaints with the WTO. The government of Canada warned that if duties levied against Canadian or Mexican products were turned over to competing U.S. companies, Canada will charge this to be a violation of NAFTA.
President George W. Bush in 2001 requested that Congress restore "fast track" negotiating authority to the president. The authority was first granted in 1974 and expired in 1994. Congress refused to renew it in 1997, because of congressional demands that environmental and labor rights protection be included in all trade negotiations. Under fast-track authority, Congress cannot amend a treaty—it can only approve or disapprove.
As in 1789, reciprocity in 2001 was buffeted and shaped by internal pressures and external circumstances. In the twentieth century the United States emerged as the leader in the struggle for an open world based on reciprocity. Contradictions, limitations, and modifications are still present, but the world is more open and reciprocity is more widespread than in 1789. The ideas proclaimed in that earlier period are still a vital part of American foreign relations.
Bovard, James. The Fair Trade Fraud. New York, 1991. A very harsh denunciation of U.S. trade policies.
Culbertson, William Smith. Reciprocity: A National Policy for Foreign Trade. New York: London, 1937. A valuable source of information about reciprocity policy from the 1890s to the 1930s, especially good for the 1920s.
Eckes, Alfred E., Jr. Opening America's Market: U.S. Foreign Trade Policy Since 1776. Chapel Hill, N.C., 1995.
Ellis, L. Ethan. Reciprocity 1911: A Study in Canadian-American Relations. New Haven, Conn., and Toronto, 1939. An intensive study of political and economic factors in both countries.
Evans, John W. The Kennedy Round in American Trade Policy: The Twilight of the GATT? Cambridge, Mass., 1971. One of the best treatments of American commercial policy since the 1930s, although the focus is on the 1960s.
Gilbert, Felix. To The Farewell Address: Ideas of Early American Foreign Policy. Princeton, N.J., 1961. A valuable analysis of the conflicting ideas that influenced the foreign policy concepts of the Founders; the main theme is the interaction and conflict between realism and idealism.
Hornbeck, Stanley K. "The Most-Favored-Nation Clause in Commercial Treaties: Its Function in Theory and in Practice and Its Relation to Tariff Policies." Bulletin of the University of Wisconsin. 343: Economics and Political Science series, 6, no. 2 (1910). Remains the most complete treatment of a generally ignored subject.
Kottman, Richard Norman. Reciprocity and the North Atlantic Triangle, 1932–1938. Ithaca, N.Y., 1968. One of the most detailed and well-researched discussions of the negotiations of reciprocal trade agreements with Canada and Britain.
Lovett, William A., Alfred E. Eckes, Jr., and Richard L. Brinkman. U.S. Trade Policy: History, Theory and the WTO. Armonk, N.Y., 1999. A highly critical work on recent trade policy; argues that the U.S. must be much more aggressive in pushing for true reciprocity.
Low, Patrick. Trading Free: The GATT and U.S. Trade Policy. New York, 1993. An in-depth examination of the way GATT has worked.
Ratner, Sidney. The Tariff in American History. New York, 1972. A succinct history but needs supplementing for fine points and technicalities.
Setser, Vernon G. The Commercial Reciprocity Policy of the United States, 1774–1829. Philadelphia and London, 1937. Absolutely essential to any understanding of economic foreign policy for the period; an intensive study based on multiarchival research.
Terrill, Tom E. The Tariff, Politics, and American Foreign Policy 1874–1901. Westport, Conn., 1973. A valuable analysis of economic policies and their relationship to domestic politics and economic factors.
Williams, Benjamin H. Economic Foreign Policy of the United States. New York, 1929. Still one of the best reference works for all aspects of the subject; organized topically with many details.
Zeiler, Thomas W. Free Trade, Free World: The Advent of GATT. Chapel Hill, N.C., 1999.
See also Economic Policy and Theory; Most-Favored-Nation Principle; Open Door Policy; Tariff Policy; Treaties .
Smith, Robert Freeman. "Reciprocity." Encyclopedia of American Foreign Policy. 2002. Encyclopedia.com. (July 29, 2016). http://www.encyclopedia.com/doc/1G2-3402300129.html
Smith, Robert Freeman. "Reciprocity." Encyclopedia of American Foreign Policy. 2002. Retrieved July 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3402300129.html
Reciprocity is mutual exchange. It is the back-and-forth movement of goods and services between people. Reciprocity is the defining characteristic of nearly every nonmarket exchange system, and it shapes formal market economics as well. Dynamic social and political aspects of mutual exchange significantly influence the production, distribution, and consumption of goods and services in all societies. Nuances in reciprocity also influence how various items and labor are imbued with culturally specific values.
Marshall Sahlins (1972), drawing on the work of Bronislaw Malinowski (1922) and Marcel Mauss (1925), pinpoints three overarching categories of reciprocal exchange among different past and present peoples: (1) generalized reciprocity, (2) balanced reciprocity, and (3) negative reciprocity. These distinct forms of mutual exchange often correspond with differing degrees of closeness in society. Whereas intensely social groups employ generalized reciprocity, moderately engaged communities practice balanced reciprocity, and distant networks of individuals commonly use negative reciprocity. Within a given culture, the different kinds of reciprocal exchange are not exclusive; multiple forms can coexist and be used for interaction with various groups.
Generalized reciprocity is driven by generosity and magnanimity. The exchange consists of pure something-for-nothing gifts. However, since the giver enjoys giving and gains satisfaction from the apparently one-sided transaction, the exchange is, in fact, reciprocal. Although givers engaging in generalized reciprocity may seem disinterested because they do not actively seek compensation for their altruistic actions, they are nonetheless rewarded with contentment for their good deeds. Westerners often only engage in generalized reciprocity when dealing with close family members and friends, but many non-Western societies employ generalized reciprocity on a much wider scale. Successful generalized reciprocity relies overwhelmingly on trust and interpersonal bonds.
Balanced reciprocity consists of giving that is later requited and balanced by return offerings. The original giver must trust the recipient enough to know that the gift will ultimately be fairly and adequately requited. Since there is always a danger that the initial gift will not be properly reciprocated, these offerings are often made publicly. The presence of an audience helps to ensure that gifts are properly repaid in two respects. First, they serve as a public record for exactly what was offered and accepted. Second, the local community can punish those who accept gifts without reciprocating by spreading word of the exchange transgression, thus socially humiliating ungracious recipients and discouraging others from making future gifts to them.
The timing of balanced reciprocity is essential to the success of this informal exchange system. Jacques Derrida (1992) asserts that the only thing the gift truly offers is time—“time to forget, time to return, time for delayed reciprocation that is no longer a return” (Schrift 1997, p.10). Since an immediate countergift diminishes the necessary display of trust, the initial offering creates a temporal buffer. When discussing the time that a gift offers, Derrida identified a meaningful cross-cultural linguistic similarity between the term present as (1) a description of time and (2) a reference to an offering. All in one, the word present captures the duality of Derrida’s argument. A present—a material gift—provides the recipient with the present, the here and now. The offering requires future reciprocation yet frees the recipient from doing anything in the present; it provides the recipient with time. In a single word, the present presents the present (Mallios 2005).
Mauss notes an important link between perceptions of generalized and balanced reciprocity. He poetically writes, “Society always pays itself in the counterfeit coin of its dream” (Bourdieu 1997, p. 231). Mauss’s metaphor captures two distinct aspects of the gift. “Society paying itself” is a reference to obligatory reciprocation, the mandatory return offerings made by individuals engaging in balanced reciprocity. Yet, the exchange is made “in the counterfeit coin of its dream,” an offering that maintains the superficial form of pure something-for-nothing generosity. It appears to be a selfless act of altruism. Although these transactions are indeed mandatory, they are physically indistinguishable from blissful magnanimity. The dream is generosity; the hidden reality is the obligation to give (Mallios 2005).
Negative reciprocity is trade. It is the simultaneous and immediate exchange of one good or service for another. Trade can be characterized by antagonistic haggling or complete anonymity. The transaction is in no way dependent on trust or the closeness of the individuals involved in the exchange. The only relationship of significance is the equation of exchange values between the goods or services being traded.
Chris Gregory (1982) summarizes the differences between balanced reciprocity and negative reciprocity. Calling the former a gift-exchange system and the latter a commodity-exchange system, Gregory explains that, “Commodities are alienable objects transacted by aliens; gifts are inalienable objects transacted by non-aliens” (1982, p. 42). One is a sale between strangers; the other is a loan between friends. There is also an important exchange-form distinction that adds to Gregory’s dichotomy: commodities are alienable objects traded —something for something—by aliens; gifts are inalienable objects given—something for nothing—by non-aliens (Mallios 2006). Although the initial gift in balanced reciprocity mandates a return gift and is ultimately an exchange of something for something, it nevertheless takes the meaningful form of something for nothing. Gregory presents these two models as opposites, with the giving of inalienable goods between permanently allied and perpetually interdependent transactors on one side and the trading of alienable goods between momentarily allied and perpetually independent transactors on the other.
Distinct differences exist between the world’s many economic systems that are based primarily on balanced reciprocity. Anthropologists often use the terms limited and unlimited exchange to describe an important difference within these economic systems. Limited exchange confines the interaction between a set of partners. It is symmetrically dyadic, meaning that one person gives an item to someone else and that recipient makes a return offering back to the original benefactor. The most common form of reciprocal interaction, limited exchange includes only two people—that is its inherent limitation—and only two sets of offerings. Unlimited exchange, to the contrary, is open-ended. Different people pass gifts on asymmetrically in a series of exchanges. In this case, a person gives a present to another individual, who then regales a third person. Unlimited gift exchange spirals outward to include multiple parties, one of whom will ultimately make an offering to the original gift giver. This final present completes the circular exchange system. Ideally, blood donation in the United States follows a process of unlimited gift exchange. People who give blood pass their offering onto anonymous others, who then feel obliged by these magnanimous gifts to repeat the action at some point later in time. In the long run, donors participating in a successful system of unlimited balanced reciprocity are able to depend on the available blood donations of equally anonymous others should they find themselves or their loved ones deficient. The driving force behind seemingly random acts of kindness, unlimited reciprocity establishes a favorable gift karma that its participants expect to produce far-reaching benefits for all.
A similar distinction concerns even and incremental exchange. Even gift giving results when an offering completely cancels out a previous debt. A present that both eliminates debt and creates a new obligation contributes to incremental gift giving. Repeated incremental gifts further connect exchange partners as they continue to seesaw back and forth in terms of debt owed and debt accrued. This type of gift exchange is more common than even gift giving for the simple fact that evenness is not a primary goal or concern in the gift economy. Social reciprocity hinges on creating and enhancing mutually beneficial relationships, not canceling them out.
Undermining reciprocity is more than a simple economic transgression. Mauss explains that, “To refuse to give, just as to refuse to accept is tantamount to declaring war; it is to reject the bond of alliance and commonality” (1925, p. 13). Failure to perpetuate reciprocal exchanges and relationships that draw individuals closer together, in fact, pushes intended exchange partners away from each other. This denial frequently leads to conflict. Claude Lévi-Strauss (1969) identified a link between exchange and hostility. He writes in specific reference to native Nambikwaras of western Brazil and in general of societies that engage in balanced reciprocity, “Exchanges are peacefully resolved wars, and wars are the result of unsuccessful transactions” (Lévi-Strauss 1969, p. 62).
One of the most pronounced examples of a reciprocity-based culture clash occurred in 1607 at Jamestown Island, the first permanent English settlement in the Americas. Historical records and analogous ethnographic accounts reveal how profit-minded English colonists and their emphasis on negative reciprocity collided with the Powhatan’s indigenous expectations of balanced reciprocity (Mallios 2006). The English failed to reciprocate the Paspaheghs—geographically the closest tribe in the Powhatan chiefdom to the new European outpost—on four separate occasions during the first weeks of colonization. Wowinchopunk, the local leader of the Paspaheghs, gave the settlers food, the land on which the colonists would build James Fort, and other goods, but the English made no return offerings. The natives grew frustrated, at one point even attempting unsuccessfully to steal reciprocal items. A Paspahegh warrior took an iron hatchet from the English camp following the series of unrequited native offerings, but a colonist snatched it back in a confrontation that nearly erupted into violence. Immediately following English trade with indigenous social rivals and enemies of the Paspaheghs, Wowinchopunk and his followers spearheaded a multitribal attack on the colonists at James Fort. Overall, exchange transgressions by the English—be they failures to give, accept, or reciprocate property—immediately preceded nearly every intercultural assault at Jamestown during the colony’s first five years.
SEE ALSO Trade
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Derrida, Jacques. 1992. Given Time, I: Counterfeit Money. Trans. Peggy Kamuf. Chicago: University of Chicago Press.
Gregory, Christopher. 1982. Gifts and Commodities. London: Academic Press.
Lévi-Strauss, Claude. 1969. The Elementary Structures of Kinship. Boston: Beacon.
Malinowski, Bronislaw. 1922. Argonauts of the Western Pacific. London: Routledge and Kegan Paul.
Mallios, Seth. 2005. Homo Regalos: A Call for Applied Gift Exchange in a Time of Global Commodification, Symbolic Violence, and Bloodshed. International Journal of the Humanities 1: 1485-1490.
Mallios, Seth. 2006. The Deadly Politics of Giving: Exchange and Violence at Ajacan, Roanoke, and Jamestown. Tuscaloosa: University of Alabama Press.
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Sahlins, Marshall. 1972. Stone Age Economics. New York: de Gruyter.
Schrift, Alan. 1997. Introduction: Why Gift? In The Logic of the Gift: Toward an Ethic of Generosity, ed. Alan Schrift, 1-22. London: Routledge.
Seth W. Mallios
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"Reciprocity." International Encyclopedia of the Social Sciences. 2008. Retrieved July 29, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045302203.html
rec·i·proc·i·ty / ˌresəˈpräsətē/ • n. the practice of exchanging things with others for mutual benefit, esp. privileges granted by one country or organization to another.
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