CAMBRIDGE UNIVERSITY PRESS Trustees of Princeton University The Institutional Roots of American Trade Policy:Politics,Coalitions,and International Trade Author(s):Michael A.Bailey,Judith Goldstein and Barry R.Weingast Source:World Politics.Vol.49.No.3(Apr.,1997).pp.309-338 Published by:Cambridge University Press Stable URL:http://www.jstor.org/stable/25054005 Accessed:13/01/201503:41 Your use of the JSTOR archive indicates your acceptance of the Terms Conditions of Use,available at http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars,researchers,and students discover,use,and build upon a wide range of content in a trusted digital archive.We use information technology and tools to increase productivity and facilitate new forms of scholarship.For more information about JSTOR,please contact support@jstor.org. Cambridge University Press and Trustees of Princeton University are collaborating with JSTOR to digitize, preserve and extend access to World Politics. 29 STOR http://www.jstor.org This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
Trustees of Princeton University The Institutional Roots of American Trade Policy: Politics, Coalitions, and International Trade Author(s): Michael A. Bailey, Judith Goldstein and Barry R. Weingast Source: World Politics, Vol. 49, No. 3 (Apr., 1997), pp. 309-338 Published by: Cambridge University Press Stable URL: http://www.jstor.org/stable/25054005 . Accessed: 13/01/2015 03:41 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. . Cambridge University Press and Trustees of Princeton University are collaborating with JSTOR to digitize, preserve and extend access to World Politics. http://www.jstor.org This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
THE INSTITUTIONAL ROOTS OF AMERICAN TRADE POLICY Politics,Coalitions,and International Trade By MICHAEL A.BAILEY,JUDITH GOLDSTEIN,and BARRY R.WEINGAST ey的be political conditions that will support such a policy.According to con- ventional views,even if politicians recognize that society gains from trade,they are constrained because of an organizational bias in society: those who lose from increased trade have a greater incentive to orga- nize than those who benefit from the policy.The outcome is an over- representation of protectionist interests and constant pressure on governments to close markets.Although logically consistent,the con- ventional view suffers from the empirical problem that democracies have and continue to support free-trade policies.We argue that politi- cal institutions,by structuring conflict over trade policy,provide an ex- planation for the divergence between analyses that predict economic closure and the empirical reality of relatively free trade. The importance of institutional rules is no more apparent than in the case of the creation and sustenance of a liberal trade policy in the United States.For most of the nineteenth century,protectionist inter- ests successfully pressured Congress to maintain high barriers to trade. Although the interest of manufacturers in cheap raw materials period- ically led Congress to enact a"free list"for such products,the interests of consumers and exporters were largely ignored.This situation changed dramatically with the passage of the Reciprocal Trade Agree- ments Act(RTAA)in 1934,which changed the way trade policy was de- termined and set the stage for American leadership in efforts to expand international trade. Trade liberalization in the United States was neither inevitable nor irrevocable;the structure of American politics in the middle of the twentieth century made trade policy still vulnerable to protectionist impulses that were difficult to contain.Hence,any explanation of American trade policy must account not only for the passage of the World Politics 49(April 1997),309-38 This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use Terms ad Conditions
THE INSTITUTIONAL ROOTS OF AMERICAN TRADE POLICY Politics, Coalitions, and International Trade By MICHAEL A. BAILEY, JUDITH GOLDSTEIN, and BARRY R. WEINGAST WHILE economists are unanimous in their agreement that free trade yields significant welfare gains, no consensus exists on the political conditions that will support such a policy. According to con ventional views, even if politicians recognize that society gains from trade, they are constrained because of an organizational bias in society: those who lose from increased trade have a greater incentive to orga nize than those who benefit from the policy The outcome is an over representation of protectionist interests and constant pressure on governments to close markets. Although logically consistent, the con ventional view suffers from the empirical problem that democracies have and continue to support free-trade policies. We argue that politi cal institutions, by structuring conflict over trade policy, provide an ex planation for the divergence between analyses that predict economic closure and the empirical reality of relatively free trade. The importance of institutional rules is no more apparent than in the case of the creation and sustenance of a liberal trade policy in the United States. For most of the nineteenth century, protectionist inter ests successfully pressured Congress to maintain high barriers to trade. Although the interest of manufacturers in cheap raw materials period ically led Congress to enact a "free list" for such products, the interests of consumers and exporters were largely ignored. This situation changed dramatically with the passage of the Reciprocal Trade Agree ments Act (rtaa) in 1934, which changed the way trade policy was de termined and set the stage for American leadership in efforts to expand international trade. Trade liberalization in the United States was neither inevitable nor irrevocable; the structure of American politics in the middle of the twentieth century made trade policy still vulnerable to protectionist impulses that were difficult to contain. Hence, any explanation of American trade policy must account not only for the passage of the World Politics 49 (April 1997), 309-38 This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
310 WORLD POLITICS RTAA but also for how and why Congress sustained the trade liberaliza- tion program in the ensuing decades. This essay offers an explanation for the timing,form,and efficacy of this institutional innovation.The argument has two parts.First,we ask what explains the choice of the rules and procedures that characterized the 1934 foundational legislation.Two rule changes distinguished the Reciprocal Trade Agreements Act from its predecessors:(1)it man- dated reciprocal,not unilateral,tariff reductions,and(2)it authorized trade agreements on the basis of a simple majority vote instead of the supermajority mandated in the Constitution.We argue that these changes in trade rules reflected efforts by the Democratic Party to build support for free trade within the party and to insulate trade policy from a future Republican Congress. Second,the essay demonstrates how these two institutional changes shifted American policy to a more liberal equilibrium.The real signifi- cance of the RTAA was not just that it was passed;had it been overturned a few years later,after all,it would be nothing but a footnote to Ameri- can trade history.Rather,the RTAA had an impact because it created a dynamic of political support for free trade.In contrast to perspectives in which Congress is seen to have abdicated control of trade policy,we focus on how presidential agreements affected congressional prefer- ences.The president's"bundling"of international and domestic tariffs made low tariffs politically durable.The ensuing increases in world trade made members of Congress more willing to trade off the political risk of reducing U.S.tariffs for the political benefits of gaining access to foreign markets.This change in preference enabled presidents to ask for and receive ever broader authority to negotiate tariff reductions. We divide this essay into three sections.Section I begins with the empirical observation of the breakdown of partisan divisions on trade and the emergence of a free-trade coalition,a puzzling occurrence given the previous decades of trade closure and continued congressional involvement in trade policy.Section II explains the origins of the RTAA and shows how political factors changed the institutional environment of trade policy.We offer a model in which members of Congress,the president,and a generic foreign government interact on trade policy. Section III examines the dynamic effects of the RTAA and shows how its institutional structure changed the political environment of trade policy.Not only did the RTAA dramatically increase the political dura- bility of low tariffs,but,as we show through an empirical examination of congressional voting in 1953 and 1962,the rise in exports that it brought about also led to changes in congressional preferences on trade. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
310 WORLD POLITICS RTAA but also for how and why Congress sustained the trade liberaliza tion program in the ensuing decades. This essay offers an explanation for the timing, form, and efficacy of this institutional innovation. The argument has two parts. First, we ask what explains the choice of the rules and procedures that characterized the 1934 foundational legislation. Two rule changes distinguished the Reciprocal Trade Agreements Act from its predecessors: (1) it man dated reciprocal, not unilateral, tariff reductions, and (2) it authorized trade agreements on the basis of a simple majority vote instead of the supermajority mandated in the Constitution. We argue that these changes in trade rules reflected efforts by the Democratic Party to build support for free trade within the party and to insulate trade policy from a future Republican Congress. Second, the essay demonstrates how these two institutional changes shifted American policy to a more liberal equilibrium. The real signifi cance of the RTAA was not just that it was passed; had it been overturned a few years later, after all, it would be nothing but a footnote to Ameri can trade history. Rather, the RTAA had an impact because it created a dynamic of political support for free trade. In contrast to perspectives in which Congress is seen to have abdicated control of trade policy, we focus on how presidential agreements affected congressional prefer ences. The president s "bundling" of international and domestic tariffs made low tariffs politically durable. The ensuing increases in world trade made members of Congress more willing to trade off the political risk of reducing U.S. tariffs for the political benefits of gaining access to foreign markets. This change in preference enabled presidents to ask for and receive ever broader authority to negotiate tariff reductions. We divide this essay into three sections. Section I begins with the empirical observation of the breakdown of partisan divisions on trade and the emergence of a free-trade coalition, a puzzling occurrence given the previous decades of trade closure and continued congressional involvement in trade policy. Section II explains the origins of the RTAA and shows how political factors changed the institutional environment of trade policy. We offer a model in which members of Congress, the president, and a generic foreign government interact on trade policy. Section III examines the dynamic effects of the RTAA and shows how its institutional structure changed the political environment of trade policy. Not only did the RTAA dramatically increase the political dura bility of low tariffs, but, as we show through an empirical examination of congressional voting in 1953 and 1962, the rise in exports that it brought about also led to changes in congressional preferences on trade. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
AMERICAN TRADE POLICY 311 I.BIPARTISAN SUPPORT FOR TRADE POLICY One of the anomalies in the history of U.S.politics involves the rela- tively rapid change in the political salience of trade policy.Where trade policy was a defining issue of partisan politics in the late nineteenth and early twentieth centuries,it all but disappeared from the political arena by the 1950s.Indicative of the charged political climate of early tariff policy-making were policy shifts that followed changes in control of government.As shown in Table 1,trade policy through 1934 shows tremendous predictability.In general,when Democrats took office, they lowered tariffs;when Republicans held office,they did the oppo- site.This ability to predict policy based on party control disappears in midcentury.After World War II the parties look increasingly similar in their voting behavior.(See Figures 1 and 2.)What explains this change in congressional preferences? There is an impressive body of literature suggesting that change oc- curred because Congress abdicated its control over trade policy when the RTAA transferred authority for setting tariffs to the president.By one account,the work associated with tariff legislation had become so onerous that members of Congress chose to remove themselves from the process.While revision of tariff schedules had never been a simple matter,the process had degenerated into a frenzy of special-interest TABLE 1 PARTISAN PATTERNS OF MAJOR TARIFF LEGISLATION (1846-1934) Control of Congress Year and Presidency Legislation General Effect 1846 Democrat Walker reduced tariffs 1861 Republican Morrill increased tariffs 1890 Republican McKinley increased tariffs 1894 Democrat Wilson-Gorman reduced tariffs 1897 Republican Dingley increased tariffs 1909 Republican Payne-Aldrich reduced tariffs 1913 Democrat Underwood reduced tariffs 1922 Republican Fordney-McCumber increased tariffs 1930 Republican Smoot-Hawley increased tariffs 1934 Democrat RTAA reduced tariffs Raymond Bauer,Ithiel de Sola Pool,and Lewis Dexter,American Business and Public Policy,2d ed. (Chicago:Aldine-Atherton,1972),14;Douglas Nelson,"Domestic Political Preconditions of U.S. Trade Policy:Liberal Structure and Protectionist Dynamics,"Journal of Public Policy 9(January-April 1986). This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
AMERICAN TRADE POLICY I. Bipartisan Support for Trade Policy 311 One of the anomalies in the history of U.S. politics involves the rela tively rapid change in the political salience of trade policy. Where trade policy was a defining issue of partisan politics in the late nineteenth and early twentieth centuries, it all but disappeared from the political arena by the 1950s. Indicative of the charged political climate of early tariff policy-making were policy shifts that followed changes in control of government. As shown in Table 1, trade policy through 1934 shows tremendous predictability. In general, when Democrats took office, they lowered tariffs; when Republicans held office, they did the oppo site. This ability to predict policy based on party control disappears in midcentury. After World War II the parties look increasingly similar in their voting behavior. (See Figures 1 and 2.) What explains this change in congressional preferences? There is an impressive body of literature suggesting that change oc curred because Congress abdicated its control over trade policy when the RTAA transferred authority for setting tariffs to the president. By one account, the work associated with tariff legislation had become so onerous that members of Congress chose to remove themselves from the process.1 While revision of tariff schedules had never been a simple matter, the process had degenerated into a frenzy of special-interest Table 1 Partisan Patterns of Major Tariff Legislation (1846-1934) Control of Congress Year and Presidency Legislation General Effect 1846 1861 1890 1894 1897 1909 1913 1922 1930 1934 Democrat Republican Republican Democrat Republican Republican Democrat Republican Republican Democrat Walker Morrill McKinley Wilson-Gorman Dingley Payne-Aldrich Underwood Fordney-McCumber Smoot-Hawley RTAA reduced tariffs increased tariffs increased tariffs reduced tariffs increased tariffs reduced tariffs reduced tariffs increased tariffs increased tariffs reduced tariffs 1 Raymond Bauer, Ithiel de Sola Pool, and Lewis Dexter, American Business and Public Policy* 2d ed. (Chicago: Aldine-Atherton, 1972), 14; Douglas Nelson, "Domestic Political Preconditions of U.S. Trade Policy: Liberal Structure and Protectionist Dynamics," Journal of Public Policy 9 (January-April 1986). This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
312 WORLD POLITICS 1.00 00 0.70 0.60 -Dem 0.50 0A0 .....Rep 0.30 0.20 0.10 0.00 茵卧恩罩 FIGURE 1 VOTING IN SENATE ON PASSAGE OF MAJOR TRADE LEGISLATION BY PARTY (1913-62) SOURCES:The votes included in the figures are as follows:1913 Underwood Tariff,1922 Fordney- McCumber Tariff,1930 Smoot-Hawley Tariff,1934 RTAA,1937 RTAA Renewal,1940 RTAA Renewal, 1943 RTAA Renewal,1945 RTAA Renewal (HR3240),1951 RTAA Renewal in Senate(HR1612) (House vote was voice vote),1953 RTAA Renewal (HR5495),1954 RTAA Renewal (HR9474),1955 RTAA Renewal(HR1),1958 RTAA Renewal(HR12591),1962 Trade Expansion Act(HR 11970). Votes in favor of the Underwood Tariff,the RTAA,all RTAA renewals,and the Trade Expansion Act are coded as votes for liberalization.Votes against the Fordney-McCumber and Smoot-Hawley Tariff bills are coded as votes for liberalization.The 1948 vote on RTAA renewal (HR6556)has been omitted,as it was particularly idiosyncratic.Most Democrats opposed renewal because of the inclusion of protec- tionist"peril point"provisions.Obviously,their votes were not votes against liberalization. lobbying and deal making with the Smoot-Hawley Tariff Bill of 1930. Schattschneider wrote of the"truly Sisyphean labor"to which the leg- islation condemned Congress-eleven thousand pages of testimony and briefs collected over forty-three days and five nights of hearings.2 Many therefore viewed the congressional move to delegate authority to change tariffs as a means of avoiding months of tedious hearings and negotiations. Several factors make it difficult to accept that the fundamental mo- tivation for the RTAA was a desire to reduce workload.First,the easiest way to reduce workload is to do nothing.Clearly this was not the choice of Congress.3 Second,there were many other ways to streamline 2E.E Schattschneider,Politics,Pressure and the Tarif A Study of Free Private Enterprise in Pressure Pol- itics as Shown in the 1929-1930 Revision of the Tarif(Hamden,Conn.:Archon Books,1935),29,36. 3Karen Schnietz,"To Delegate or Not to Delegate:Congressional Institutional Choices in the Reg- ulation of Foreign Trade,1916-1934"(Ph.D.diss.,University of California,1994),125. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use toSTOR Terms a Conditions
312 WORLD POLITICS -Dem -Rep Figure 1 Voting in Senate on Passage of Major Trade Legislation by Party (1913-62) SOURCES: The votes included in the figures are as follows: 1913 Underwood Tariff, 1922 Fordney McCumber Tariff, 1930 Smoot-Hawley Tariff, 1934 RTAA, 1937 RTAA Renewal, 1940 RTAA Renewal, 1943 RTAA Renewal, 1945 RTAA Renewal (HR3240), 1951 RTAA Renewal in Senate (HR1612) (House vote was voice vote), 1953 RTAA Renewal (HR5495), 1954 RTAA Renewal (HR9474), 1955 RTAA Renewal (HR1), 1958 RTAA Renewal (HR12591), 1962 Trade Expansion Act (HR 11970). Votes in favor of the Underwood Tariff, the RTAA, all RTAA renewals, and the Trade Expansion Act are coded as votes for liberalization. Votes against the Fordney-McCumber and Smoot-Hawley Tariff bills are coded as votes for liberalization. The 1948 vote on RTAA renewal (HR6556) has been omitted, as it was particularly idiosyncratic. Most Democrats opposed renewal because of the inclusion of protec tionist "peril point" provisions. Obviously, their votes were not votes against liberalization. lobbying and deal making with the Smoot-Hawley Tariff Bill of 1930. Schattschneider wrote of the "truly Sisyphean labor" to which the leg islation condemned Congress?eleven thousand pages of testimony and briefs collected over forty-three days and five nights of hearings.2 Many therefore viewed the congressional move to delegate authority to change tariffs as a means of avoiding months of tedious hearings and negotiations. Several factors make it difficult to accept that the fundamental mo tivation for the RTAA was a desire to reduce workload. First, the easiest way to reduce workload is to do nothing. Clearly this was not the choice of Congress.3 Second, there were many other ways to streamline 2 E. E Schattschneider, Politics, Pressure and the Tariff: A Study of Free Private Enterprise in Pressure Pol itics as Shown in the 1929-1930 Revision of the r?n^(Hamden, Conn.: Archon Books, 1935), 29,36. 3 Karen Schnietz, aTo Delegate or Not to Delegate: Congressional Institutional Choices in the Reg ulation of Foreign Trade, 1916-1934" (Th.D. diss., University of California, 1994), 125. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
AMERICAN TRADE POLICY 313 1.00 0.90 0.80 0.70 0.60 点 0.50 -Dem 8130A 0.40 ......Rep 0.30 0.20 0.10 0.00 FIGURE 2 VOTING IN HOUSE ON PASSAGE OF MAJOR TRADE LEGISLATION BY PARTY (1913-62) SOURCES:See sources for Figure 1. the process than by delegating to the president:existing organizations could have been used differently,new committees and commissions could have been created,and rules and formulas could have been estab- lished.There is no specific reason to choose delegation to the president over these other possibilities. An alternative explanation,the"lesson thesis,"suggests that the dis- astrous results of the Smoot-Hawley Tariff led members of Congress to the realization that they were politically incapable of passing a rational tariff policy.Destler,for example,states that members of Congress chose to delegate in order to"protect themselves from the direct one- sided pressure from producer interests that had led them to make bad law.”4 This perspective,too,is problematic.First,one should be wary of models of congressional behavior in which members of Congress act against one-sided political pressure in the interest of good public policy for no political reason.If such behavior were the norm,one would expect Congress to"protect"itself from the American Association of I.M.Destler,American Trade Politics,2d ed.(Washington D.C.:Institute for International Eco- nomics,1994),14.See also Robert Baldwin,The Political Economy of U.S.Import Policy (Cambridge: MIT Press,1985);and Robert Pastor,Congress and the Politics ofU.S.Foreign Economic Policy (Berkeley: University of California Press,1980). This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use Terms ad Conditions
AMERICAN TRADE POLICY 313 1.00 ? 0.90 1 0.80 I o > 0.70 0.60 4 0.50 0.40 4 0.30 0.20 0.10 0.00 -L -Dem -Rep H-h m CN ON ON ON o ON On 'it On VO On Figure 2 Voting in House on Passage of Major Trade Legislation by Party (1913-62) SOURCES: See sources for Figure 1. the process than by delegating to the president: existing organizations could have been used differently, new committees and commissions could have been created, and rules and formulas could have been estab lished. There is no specific reason to choose delegation to the president over these other possibilities. An alternative explanation, the "lesson thesis," suggests that the dis astrous results of the Smoot-Hawley Tariff led members of Congress to the realization that they were politically incapable of passing a rational tariff policy. Destler, for example, states that members of Congress chose to delegate in order to "protect themselves from the direct one sided pressure from producer interests that had led them to make bad law."4 This perspective, too, is problematic. First, one should be wary of models of congressional behavior in which members of Congress act against one-sided political pressure in the interest of good public policy for no political reason. If such behavior were the norm, one would expect Congress to "protect" itself from the American Association of 41. M. Destler, American Trade Politics, 2d ed. (Washington D.C.: Institute for International Eco nomics, 1994), 14. See also Robert Baldwin, The Political Economy of U.S. Import Policy (Cambridge: MIT Press, 1985); and Robert Pastor, Congress and the Politics of U.S. Foreign Economic Policy (Berkeley: University of California Press, 1980). This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
314 WORLD POLITICS Retired People,the National Rifle Association,farmers,oil producers, and almost all other interests as well.Needless to say,this is not gener- ally the case;even on trade,Congress has continued to represent pro- ducer interests on more than a few occasions.5 Second,problems with the process in 1930 do not prove that Con- gress was incapable of getting the process back under control.A new set of congressional leaders with different priorities could have orga- nized procedures differently so as to achieve a better outcome than that of 1930.Congress had gone through such reorganizations in 1894, 1909,and 1913;and it did it again in 1934,when the Senate defeated many amendments seeking exemptions for particular industries,pre- cisely the type of amendments that had spun the process out of control in1930.6 Third,Schnietz provides strong empirical evidence against the les- son thesis.If congressional learning did in fact occur between 1930 and 1934,one would expect to see a substantial number of members who voted for the Smoot-Hawley Tariff coming around to support the RTAA.?To the contrary,however,voting on botb the Smoot-Hawley Tariff and the RTAA was almost wholly partisan:Republicans favored the former and opposed the latter,whereas Democrats opposed the for- mer and favored the latter.Of 225 representatives and senators who voted on both bills,only nine voted in a manner consistent with the les- son thesis.The remaining 96 percent voted either along party lines or in a manner inconsistent with the lesson thesis.The difference between 1930 and 1934 is therefore not that protariff members of Congress learned from their mistake,but rather that there were too few Republi- cans in 1934 to oppose the Democrats'initiative. As well as disagreeing on why Congress would grant new tariff- setting powers to the president,analyses differ over the actual effect of the RTAA on American policy.One view,consistent with the deflection and lesson theses,holds that the RTAA allowed Congress to wash its s See,for example,Destler (fn.4),71. Stephan Haggard,"The Institutional Foundations of Hegemony:Explaining the Reciprocal Trade Agreements Act of 1934,"in G.John Ikenberry,David Lake,and Michael Mastanduno,eds.,The State and American Foreign Economic Policy(Ithaca,N.Y.:Cornell University Press,1988),113. 7 Schnietz (fn.3),129. Ibid.,128-32.For a third thesis,see Thomas Ferguson,"From Normalcy to New Deal:Industrial Structure,Party Competition,and American Public Policy in the Great Depression,"Internationa/Or- ganization 38(Winter 1984).He argues that the New Deal coalition was not one of workers,poor and minorities,but one of capital-intensive industries,investment banks,and internationally oriented commercial banks.Haggard offers a persuasive critique.First,Ferguson writes that this new coalition congealed "by 1938";it was not clear that it was a powerful force in 1934 when the New Deal was clearly hostile to capital,pushing policies such as the NIRA.Second,Ferguson studies the preferences of one block to explain outcomes,ignoring other actors;see Haggard (fn.6),98. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM to JSTOR Conditions
314 WORLD POLITICS Retired People, the National Rifle Association, farmers, oil producers, and almost all other interests as well. Needless to say, this is not gener ally the case; even on trade, Congress has continued to represent pro ducer interests on more than a few occasions.5 Second, problems with the process in 1930 do not prove that Con gress was incapable of getting the process back under control. A new set of congressional leaders with different priorities could have orga nized procedures differently so as to achieve a better outcome than that of 1930. Congress had gone through such reorganizations in 1894, 1909, and 1913; and it did it again in 1934, when the Senate defeated many amendments seeking exemptions for particular industries, pre cisely the type of amendments that had spun the process out of control in 1930.6 Third, Schnietz provides strong empirical evidence against the les son thesis. If congressional learning did in fact occur between 1930 and 1934, one would expect to see a substantial number of members who voted for the Smoot-Hawley Tariff coming around to support the RTAA.7 To the contrary, however, voting on both the Smoot-Hawley Tariff and the RTAA was almost wholly partisan: Republicans favored the former and opposed the latter, whereas Democrats opposed the for mer and favored the latter. Of 225 representatives and senators who voted on both bills, only nine voted in a manner consistent with the les son thesis. The remaining 96 percent voted either along party lines or in a manner inconsistent with the lesson thesis. The difference between 1930 and 1934 is therefore not that protariff members of Congress learned from their mistake, but rather that there were too few Republi cans in 1934 to oppose the Democrats' initiative.8 As well as disagreeing on why Congress would grant new tariff setting powers to the president, analyses differ over the actual effect of the RTAA on American policy. One view, consistent with the deflection and lesson theses, holds that the RTAA allowed Congress to wash its 5 See, for example, Desder (fn. 4), 71. 6 Stephan Haggard, "The Institutional Foundations of Hegemony: Explaining the Reciprocal Trade Agreements Act of 1934," in G.John Ikenberry, David Lake, and Michael Mastanduno, eds., The State and American Foreign Economic Policy (Ithaca, N.Y.: Cornell University Press, 1988), 113. 7Schnietz(fn.3),129. 8 Ibid., 128-32. For a third thesis, see Thomas Ferguson, "From Normalcy to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,** International Or ganization 38 (Winter 1984). He argues that the New Deal coalition was not one of workers, poor, and minorities, but one of capital-intensive industries, investment banks, and internationally oriented commercial banks. Haggard offers a persuasive critique. First, Ferguson writes that this new coalition congealed "by 1938"; it was not clear that it was a powerful force in 1934 when the New Deal was clearly hostile to capital, pushing policies such as the NIRA. Second, Ferguson studies the preferences of one block to explain outcomes, ignoring other actors; see Haggard (fn. 6), 98. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
AMERICAN TRADE POLICY 315 hands of tariffs,leaving the president free to pursue rational liberaliza- tion of U.S.trade policy unburdoned by members of Congress or the special interests they represented. This view is overstated.While congressional activity on tariffs de- clined dramatically after the RTAA,it still remained substantial;Con- gress continued to play a central role at every step along the path to trade liberalization.Congress extended the RTAA ten times between 1934 and 1962,debating and often modifying the legislation.In 1937, for example,an amendment to limit reductions on agricultural duties to whatever level would be necessary to equalize production costs ini- tially passed the Senate and was only defeated on a revote.10 In 1948, 1951,and 1955,Congress added peril-point provisions that tied duties to the minimum rates necessary to protect domestic producers against imports.In 1953 Republicans in Congress agreed to a one-year renewal only when the president promised not to enter into any new trade ne- gotiations.1 While Congress never overturned the RTAA,members were clearly always ready to make significant changes if they thought them necessary. Another view of the effects of the RTAA focuses on new presidential agenda-setting power on trade matters.Thus,Haggard argues that the RTAA allowed executive officials to mold"the agenda and policy process to their own ideological,bureaucratic and above all,international inter- ests."2 With this power,the executive could ensure that trade policy was as liberal as politically possible,given congressional preferences on trade.This argument,however,is not sufficient to explain the long pat- tern of trade liberalization.Agenda-setting power allows the agenda setter to choose its most preferred policy from among those policies ac- ceptable to the institutionally defined electorate.Once a new status quo policy is established,however,agenda-setting power is useful only in keeping bills off the floor.As long as preferences remain constant,no further policy changes are possible;the agenda setter and the floor median find no policies preferable to this new status quo.Hence,if a progression of policy change is observed,agenda-setting power is not a sufficient cause;something else must have enabled the successive changes. For a more complete review of congressional policy,see Judith Goldstein,Ideas,Interests,and Amer- ican Trade Policy(Ithaca,N.Y.:Cornell University Press,1993);Pastor (fn.4);John Evans,The Kennedy Round in American Trade Policy(Cambridge:Harvard University Press,1971);Ernest Preeg,Traders and Diplomats (Washington D.C.:Brookings Institution,1973). 10 Yung-Chao Chu,"A History of the Hull Trade Program,1934-1939"(Ph.D.diss.,Columbia University,1957),311. Bauer,Pool,and Dexter (fn.1),33;Pastor (fn.4),101. 12 Haggard (fn.6),91. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use sbject to JSTOR Temms d Conditions
AMERICAN TRADE POLICY 315 hands of tariffs, leaving the president free to pursue rational liberaliza tion of U.S. trade policy unburdoned by members of Congress or the special interests they represented. This view is overstated. While congressional activity on tariffs de clined dramatically after the RTAA, it still remained substantial; Con gress continued to play a central role at every step along the path to trade liberalization. Congress extended the RTAA ten times between 1934 and 1962, debating and often modifying the legislation.9 In 1937, for example, an amendment to limit reductions on agricultural duties to whatever level would be necessary to equalize production costs ini tially passed the Senate and was only defeated on a revote.10 In 1948, 1951, and 1955, Congress added peril-point provisions that tied duties to the minimum rates necessary to protect domestic producers against imports. In 1953 Republicans in Congress agreed to a one-year renewal only when the president promised not to enter into any new trade ne gotiations.11 While Congress never overturned the RTAA, members were clearly always ready to make significant changes if they thought them necessary. Another view of the effects of the RTAA focuses on new presidential agenda-setting power on trade matters. Thus, Haggard argues that the RTAA allowed executive officials to mold "the agenda and policy process to their own ideological, bureaucratic and above all, international inter ests."12 With this power, the executive could ensure that trade policy was as liberal as politically possible, given congressional preferences on trade. This argument, however, is not sufficient to explain the long pat tern of trade liberalization. Agenda-setting power allows the agenda setter to choose its most preferred policy from among those policies ac ceptable to the institutionally defined electorate. Once a new status quo policy is established, however, agenda-setting power is useful only in keeping bills off the floor. As long as preferences remain constant, no further policy changes are possible; the agenda setter and the floor median find no policies preferable to this new status quo. Hence, if a progression of policy change is observed, agenda-setting power is not a sufficient cause; something else must have enabled the successive changes. 9 For a more complete review of congressional policy, see Judith Goldstein, Ideas, Interests, and Amer ican Trade Policy (Ithaca, N.Y.: Cornell University Press, 1993); Pastor (fn. 4); John Evans, The Kennedy Round in American Trade Policy (Cambridge: Harvard University Press, 1971); Ernest Preeg, Traders and Diplomats (Washington D.C.: Brookings Institution, 1973). 10 Yung-Chao Chu, "A History of the Hull Trade Program, 1934-1939" (Ph.D. diss., Columbia University, 1957), 311. 11 Bauer, Pool, and Dexter (fn. 1), 33; Pastor (fn. 4), 101. 12 Haggard (fn. 6), 91. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
316 WORLD POLITICS What does explain the passage of the RTAA in 1934 if not that Con- gress abdicated control or sought to deflect political pressure?Our an- swer is simple:the Democratic leadership wanted lower tariffs that would pass an increasingly skeptical Congress and would be able to outlive Democratic control of Congress.The institutions they designed met this goal.In that the Democrats chose to lower tariffs through re- ciprocal "bundled"agreements with other nations,some delegation to the president to negotiate these agreements was necessary.The signifi- cant change,however,was not delegation to the president per se. Rather,the RTAA marks a turning point in American trade history be- cause first,it moved Congress away from legislating unilateral tariffs, and second,it granted these bilateral agreements the status of treaties without a two-thirds supermajority. II.THE POLITICAL ORIGINS OF THE RTAA With its passage of RTAA in 1934,Congress ushered in a new era of trade policy.The legislation amended the 1930 Smoot-Hawley Tariff Act to allow the president to negotiate reciprocal trade agreements with foreign governments.In exchange for increased access to foreign mar- kets,the president was authorized to reduce U.S.duties by up to 50 percent.13 No specific duties were established or changed by the act and no congressional approval of agreements was required.14 That such legislation was passed in 1934 is somewhat surprising in light of the fact that there was no groundswell of support for tariff re- ductions.Although highly critical of Hoover's tariff policy during the 1932 campaign,Roosevelt was no staunch free trader.While he associ- ated himself with the Wilsonian international wing of the Democratic Party,at times he sounded very much like a protectionist.In the 1932 presidential campaign he announced that his trade doctrine was"not widely different from that preached by Republican statesmen and politicians"and that he favored "continuous protection for American agriculture as well as American industry."15 Reciprocity in trade legislation had a long history before the RTAA.The first explicitly reciprocal treaty was with the German Zollverein in 1844.(It was rejected by the Senate.)Many of the previous measures on trade contained provisions for reciprocal agreements,but none was nearly as broad as the RTAA.See Goldstcin (fn.9),93;and Sharyn O'Halloran,Politics,Process,and American Trade Policy (Ann Arbor:University of Michigan Press,1994). 1Consistent with section 317 of the 1922 Fordney-McCumber Act,concessions granted any one country would be generalized to all others receiving most-favored-nation status. 5 Haggard(f血.6),106-7. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use subect to JSTOR Terms d Conditions
316 WORLD POLITICS What does explain the passage of the RTAA in 1934 if not that Con gress abdicated control or sought to deflect political pressure? Our an swer is simple: the Democratic leadership wanted lower tariffs that would pass an increasingly skeptical Congress and would be able to outlive Democratic control of Congress. The institutions they designed met this goal. In that the Democrats chose to lower tariffs through re ciprocal "bundled" agreements with other nations, some delegation to the president to negotiate these agreements was necessary. The signifi cant change, however, was not delegation to the president per se. Rather, the RTAA marks a turning point in American trade history be cause first, it moved Congress away from legislating unilateral tariffs, and second, it granted these bilateral agreements the status of treaties without a two-thirds supermajority. II. The Political Origins of the rtaa With its passage of RTAA in 1934, Congress ushered in a new era of trade policy. The legislation amended the 1930 Smoot-Hawley Tariff Act to allow the president to negotiate reciprocal trade agreements with foreign governments. In exchange for increased access to foreign mar kets, the president was authorized to reduce U.S. duties by up to 50 percent.13 No specific duties were established or changed by the act and no congressional approval of agreements was required.14 That such legislation was passed in 1934 is somewhat surprising in light of the fact that there was no groundswell of support for tariff re ductions. Although highly critical of Hoover s tariff policy during the 1932 campaign, Roosevelt was no staunch free trader. While he associ ated himself with the Wilsonian international wing of the Democratic Party, at times he sounded very much like a protectionist. In the 1932 presidential campaign he announced that his trade doctrine was "not widely different from that preached by Republican statesmen and politicians" and that he favored "continuous protection for American agriculture as well as American industry."15 13 Reciprocity in trade legislation had a long history before the RTAA. The first explicidy reciprocal treaty was with the German Zollverein in 1844. (It was rejected by the Senate.) Many of the previous measures on trade contained provisions for reciprocal agreements, but none was nearly as broad as the RTAA. See Goldstein (fn. 9), 93; and Sharyn O'Halloran, Politics, Process, and American Trade Policy (Ann Arbor: University of Michigan Press, 1994). 14 Consistent with section 317 of the 1922 Fordney-McCumber Act, concessions granted any one country would be generalized to all others receiving most-favored-nation status. 15 Haggard (fn. 6), 106-7. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions
AMERICAN TRADE POLICY 317 In addition,many in the Roosevelt administration,including leading members of Roosevelt's brain trust,such as Rexford Tugwell,Raymond Moley,and Adolf Berle,placed a low priority on trade liberalization. They considered America's problems to be domestic in nature,requir- ing domestic solutions.Many members of the administration were thus willing to impose higher duties in the interests of insulating the do- mestic economy from the world economy.Such sentiment manifested itself in provisions of the National Industrial Recovery Act(NIRA)and the Agriculture Assistance Act(AAA),which allowed the government to limit imports if they were deemed to be interfering with the opera- tion of the programs.16 Rank-and-file Democrats also were not united in favor of lower tar- iffs.The increase in blue-collar and immigrant labor in the party proved a counterweight to southern preferences for lower tariffs.17 Led by Al Smith,1928 presidential nominee and 1932 contender for the nomination,a major wing of the party supported high tariffs.Indica- tively,during the debate on the Smoot-Hawley Tariff of 1930,most Democrats tempered their opposition to high tariffs.18 The Great Depression did little to enhance the appeal of lower tariffs for these Democrats.During this period,efforts to cut tariffs unilater- ally were dismissed as politically foolhardy.In 1931 Democratic repre- sentative and future speaker Henry Rainey of Illinois argued that such a unilateral reduction of tariffs would trigger"a flood of imports. During the 1932 presidential campaign,Roosevelt's advisers roundly criticized Hull's proposal of unilateral reductions,and when Roosevelt was given a draft of a speech calling for a flat 10 percent reduction in tariffs,Democratic senators Pittman (Nevada)and Walsh(Montana) warned him that support for such a measure would be politically dangerous.20 Even after the election,reciprocal cuts were so politically risky that Roosevelt delayed introducing the RTAA to Congress for a 16 See Cordell Hull,Memoirs (New York:Macmillan,1948),353;Goldstein (fn.9),154-58;and Haggard (fn.6),97.The clash between free traders such as Secretary of State Hull and protectionists led Moley to comment that "nothing which we have been dealing with has been subject to such wide differences of opinion";Goldstein(fn.9),142.By 1935 Moley was an outspoken critic of the admin- istration's trade policy.See Arthur Schatz,"Cordell Hull and the Struggle for the Reciprocal Trade Agreements Program,1932-1940"(Ph.D.diss.,University of Oregon,1965),240. 17 While Souther Democrats favored lower tariffs,they were not necessarily free traders.In general they shared the belief with Republicans that tariffs were necessary to protect wages,but disagreed with Republicans on the extent and level of tariffs.See Goldstein (fn.9),92. iFrank Fetter,"Congressional Tariff Policy,"American Economic Review 23(September 1933),416. Henry Tasca,The Reciprocal Trade Policy of the United States(Philadelphia:University of Pennsyl- vania Press,1938),14. 20 Goldstein (fn.9),142;Schatz (fn.16),51. This content downloaded from 211.80.95.69 on Tue,13 Jan 2015 03:41:43 AM All use sbject to JSTOR Temms d Conditions
AMERICAN TRADE POLICY 317 In addition, many in the Roosevelt administration, including leading members of Roosevelt's brain trust, such as RexfordTugwell, Raymond Moley, and Adolf Berle, placed a low priority on trade liberalization. They considered Americas problems to be domestic in nature, requir ing domestic solutions. Many members of the administration were thus willing to impose higher duties in the interests of insulating the do mestic economy from the world economy. Such sentiment manifested itself in provisions of the National Industrial Recovery Act (nira) and the Agriculture Assistance Act (AAA), which allowed the government to limit imports if they were deemed to be interfering with the opera tion of the programs.16 Rank-and-file Democrats also were not united in favor of lower tar iffs. The increase in blue-collar and immigrant labor in the party proved a counterweight to southern preferences for lower tariffs.17 Led by Al Smith, 1928 presidential nominee and 1932 contender for the nomination, a major wing of the party supported high tariffs. Indica tively, during the debate on the Smoot-Hawley Tariff of 1930, most Democrats tempered their opposition to high tariffs.18 The Great Depression did little to enhance the appeal of lower tariffs for these Democrats. During this period, efforts to cut tariffs unilater ally were dismissed as politically foolhardy. In 1931 Democratic repre sentative and future speaker Henry Rainey of Illinois argued that such a unilateral reduction of tariffs would trigger "a flood of imports."19 During the 1932 presidential campaign, Roosevelt's advisers roundly criticized Hulls proposal of unilateral reductions, and when Roosevelt was given a draft of a speech calling for a flat 10 percent reduction in tariffs, Democratic senators Pittman (Nevada) and Walsh (Montana) warned him that support for such a measure would be politically dangerous.20 Even after the election, reciprocal cuts were so politically risky that Roosevelt delayed introducing the RTAA to Congress for a 16 See Cordell Hull, Memoirs (New York: Macmillan, 1948), 353; Goldstein (fn. 9), 154-58; and Haggard (fn. 6), 97. The clash between free traders such as Secretary of State Hull and protectionists led Moley to comment that "nothing which we have been dealing with has been subject to such wide differences of opinion"; Goldstein (fn. 9), 142. By 1935 Moley was an outspoken critic of the admin istrations trade policy. See Arthur Schatz, "Cordell Hull and the Struggle for the Reciprocal Trade Agreements Program, 1932-1940" (Ph.D. diss., University of Oregon, 1965), 240. 17 While Southern Democrats favored lower tariffs, they were not necessarily free traders. In general they shared the belief with Republicans that tariffs were necessary to protect wages, but disagreed with Republicans on the extent and level of tariffs. See Goldstein (fn. 9), 92. 18 Frank Fetter, "Congressional Tariff Policy," American Economic Review 23 (September 1933), 416. 19 Henry Tasca, The Reciprocal Trade Policy of the United States (Philadelphia: University of Pennsyl vania Press, 1938), 14. 20 Goldstein (fn. 9), 142; Schatz (fn. 16), 51. This content downloaded from 211.80.95.69 on Tue, 13 Jan 2015 03:41:43 AM All use subject to JSTOR Terms and Conditions