SHOE Archives

Societies for the History of Economics

SHOE@YORKU.CA

Options: Use Forum View

Use Monospaced Font
Show Text Part by Default
Show All Mail Headers

Message: [<< First] [< Prev] [Next >] [Last >>]
Topic: [<< First] [< Prev] [Next >] [Last >>]
Author: [<< First] [< Prev] [Next >] [Last >>]

Print Reply
Subject:
From:
[log in to unmask] (Ross B. Emmett)
Date:
Fri Mar 31 17:19:09 2006
Content-Type:
text/plain
Parts/Attachments:
text/plain (208 lines)
======================= HES POSTING ==================== 
 
EH-NET BOOK REVIEW 
Published by H-Business ([log in to unmask]) (November, 1997) 
 
Susan Ariel Aaronson.  _Trade and the American Dream:  A Social History of 
Postwar Trade Policy_.  Lexington:  University Press of Kentucky, 1996. 
xvii + 262 pp.  Tables, figures, notes, bibliography, and index.  $62.50 
(cloth) ISBN 0-8131-1955-3; $15.95 (paper) ISBN 0-8131-0874-8. 
 
Reviewed for H-Business by Mira Wilkins <[log in to unmask]>, Florida 
International University 
 
Susan Aaronson's monograph is based on her Johns Hopkins University Ph.D. 
dissertation.  For many years, she has been studying the International 
Trade Organization (ITO), and in the last few years her subject has become 
more topical than when she initially embarked on it.  Research on what 
happened to the ITO had an almost antiquarian interest, that is, until 
January 1995, when the World Trade Organization (WTO) came into being; 
finally, the 1940s plans for an international trade organization came to 
fruition, although Aaronson insists the WTO is not a "reincarnation of the 
ITO" (p. 4).  The subtitle of Aaronson's book, "a social history of postwar 
trade policy," misrepresents its contents; much more than half this volume 
is a blow-by-blow account of the deliberations on the ITO. The material on 
the WTO is an afterthought to make the book more current. Trade policy 
discussions, 1950-1990, are virtually ignored. 
 
In the closing years of the Second World War, American policy makers 
envisaged three specialized international economic organizations:  The 
International Monetary Fund, the International Bank for Reconstruction and 
Development (now known as the World Bank), and the ITO.  Congress approved 
U.S. membership in the IMF and the World Bank, but never voted on the third 
organization.  Instead, the United States would participate in the General 
Agreement on Tariffs and Trade (GATT), originally established as an interim 
arrangement, pending approval of the ITO. 
 
The original ITO "charter" was formulated by the planners at the U.S. State 
Department in 1944.  The documents were redrafted three times before the 
final charter was signed by 54 nations in Havana in March 1948.  By then, 
Congress had approved U.S. involvement in the IMF and World Bank (in 1945). 
 Aaronson claims "ITO missed the flurry of support for internationalism 
that accompanied the end of the war" (p. 4).  Worse still, in her view, 
unlike the advocates for the United Nations, the IMF, and the World Bank, 
proponents of the ITO never mounted an effective appeal for public support 
(p. 42).  Secretary of State Cordell Hull (1933-1944), she suggests, lost 
his one-time enthusiasm for an international trade organization before he 
left office and none of his successors--Edward Stettinius, James Byrnes, 
and George Marshall--gave the idea priority.  By the time Dean Acheson, who 
had been involved in the initial planning for the ITO, became Secretary of 
State in 1949, he had put the ITO on a back burner. 
 
After a short introduction, Aaronson tells a chronological story, covering 
briefly pre-World War II U.S. trade policy and then turning to U.S. 
planning for peace and freer trade that began even before Pearl Harbor.  I 
found of particular interest her discussion of the differences between John 
Maynard Keynes and U.S. State Department officials on trade policy. In a 
footnote Aaronson quotes a lovely passage she found in a letter from Keynes 
to Dean Acheson (July 29, 1941):  "Forgive my vehemence.  This is my 
subject.  I know, or partly know, what I want.  I know, and clearly know, 
what I fear"  (p. 190 n. 48).  Regrettably, Aaronson does not link Keynes's 
role in relationship to the ITO with his role on the IMF, nor does she put 
this important quotation in the context of subsequent debates on the ITO. 
 
Aaronson is excellent on commercial policy planning in the State 
Department during 1943-1945.  Not until December 1945 did the U.S. public 
learn of its government's plans to support the formation of an 
international trade organization.  She is also excellent on the delays and 
competing matters that arose during 1946.  Finally, in October-November 
1946, in London the first international negotiations on the ITO began. U.S. 
 policy makers presented a "suggested charter," a code on international 
trade rules aimed at facilitating freer global commerce. The proposal was 
revised, based on the London discussions; the modifications covered issues 
related to domestic employment, restrictive business practices, 
intergovernmental commodity agreements, and economic development.  The 
resulting "London draft" of the ITO charter was--in Aaronson's 
words--"riddled with exceptions and escape clauses," codifying the 
exceptions to the rules of trade rather than codifying the actual rules of 
trade that would open up world markets (p. 68).  In addition, the London 
Conference opened the way for a general agreement on trade, independent of 
the charter for the ITO.  For the United States, this proved an "easy out": 
 the United States could negotiate a general agreement on tariffs and trade 
under the authority of the existing U.S. Reciprocal Trade Agreements Act 
(in 1945, Congress had again extended the RTAA of 1934 for an added three 
years); policy makers did not have to go to Congress for new authorization. 
 
Thus, in 1946, U.S. planners adopted a two-track approach to global 
cooperation in international commerce.  One track was to develop the 
temporary general agreement on tariffs and trade (GATT), in line with the 
US RTAA; the ITO was now the second track (once it was approved, it was 
assumed it would replace GATT).  The next step in the process occurred in 
Geneva in April 1947, where international negotiations were launched on 
both GATT and the ITO.  The GATT arrangements were understood as 
provisional. 
 
By the autumn of 1947, the first round of GATT discussions was 
successfully concluded in Geneva, where 23 nations engaged in bilateral 
bargaining--product by product--seeking reductions in duties.  Concessions 
made were then generalized, through the endorsement of the most-favored 
nation principle (i.e. concessions made to one country would be extended to 
all most-favored nations).  This conformed to the existing U.S. Reciprocal 
Trade Agreements Act (the RTAA).  In all, 123 sets of negotiations were 
concluded and incorporated into the GATT, signed on October 30, 1947.  The 
US, under the RTAA authority, was a signatory. 
 
In November 1947, international negotiations started in Havana to finish 
the ITO charter--the second track in U.S. policy makers' plans.  Yet, as 
the talks went forward and persisted into 1948, U.S. State Department 
officials vacillated over whether to push for Congressional support for the 
ITO, or alternatively, for the RTAA (due to expire in June 1948), or for 
both. And, as they weighed the options, the European Recovery Program and 
the Cold War captured their attention.  Early in 1948, the State Department 
resolved to concentrate its efforts on renewing the RTAA and to postpone 
temporarily submitting the ITO to Congress.  The latter seemed to have 
little strong support and GATT became the "fall back" position (p. 94).  In 
March 1948, the Havana Charter for the ITO--the final charter--was signed 
by 54 nations.  In June 1948, Congress agreed to extend the RTAA, but only 
for a single year.  There was a presidential election in 1948 and senior 
policy makers in the State Department deferred ITO considerations, and then 
in 1949, once more focused on the RTAA. 
 
It came to pass that the State Department never pursued the "second 
track."  While the 1949 Senate hearings on the RTAA extension did touch on 
the ITO, while President Harry Truman did submit the Havana Charter for the 
ITO to Congress in April 1949, and while in 1950, the House of 
Representatives did conduct hearings on the charter, for all practical 
purposes the ITO was "dead on arrival" at the Congress.  America failed to 
join the ITO, and that organization (for which there had been so much 
preparation) never materialized.  At the end of 1950, the United States 
officially abandoned all efforts to create the ITO.  The United States did 
remain part of GATT, participating in the sequence of rounds of 
international trade negotiations. 
 
I had always believed (based on earlier studies) that U.S. membership in 
the ITO had ultimately failed because large U.S. businesses lost interest 
in it, fearing it would be used not to open trade but to regulate cartels 
and cartels might be defined in terms of big business.  This is an 
explanation Aaronson does not even note.  Cartels are not in her index, 
although they are mentioned several times in passing.  "Antitrust" is also 
not in her index and in documenting business responses, she never discusses 
the international concerns of business on this issue.  She does note that 
the most internationalist of business groups, the National Foreign Trade 
"Committee" (I think she means the National Foreign Trade Council) had by 
1948 decided to oppose U.S. participation in the ITO; she never explains 
why. 
 
Her argument is that Congress failed to vote for (or even on) the ITO 
because U.S. State Department policy makers had been secretive, been 
unable to prepare the ground, and neglected public relations.  She 
documents hesitation, compromises, and confusion.  Unlike the United 
Nations where the support of the public was wooed and unlike the Bretton 
Woods institutions (the IMF and the World Bank)--where the subject was 
remote and even so there was good public relations--tariffs were important 
domestically; tariffs on individual products had their strong advocates; 
and U.S. entry into an international organization was not acceptable given 
the absence of a strongly favorable public response.  Her text demonstrates 
clearly that policy makers dealing with these trade issues lacked clear 
direction.  There appears to have been a vacuum in effective leadership, 
such as Harry Dexter White and John Maynard Keynes provided for the IMF and 
World Bank arrangements.  Moreover, Aaronson's argues that when America 
joined the UN, the IMF, and the World Bank, the Cold War had not yet begun. 
 When the Havana Conference occurred in 1948, times had changed.  European 
and Japanese recovery were top priority, as the early phases of the Cold 
War shaped policy makers' perceptions.  Americans' outlook in 1949 and 1950 
was entirely different from 1944 and 1945.  I think Aaronson is on sound 
grounds in her stress on "timing" as critical to U.S. membership in the 
United Nations and the Bretton Woods institutions and its not joining the 
ITO.  This makes good sense as does her narrative on what occurred.  She is 
also right in her emphasis on how Congressmen had strong views on tariffs 
and trade and the State Department's policy makers--from 1945 
onward--seemed unable to understand this.  Her story-line makes apparent 
that by 1950, while there remained many who supported U.S. involvement in 
the ITO (see p. 129), the opposition to ITO membership within the United 
States had become highly diverse--with a wide range of objections and most 
important, no vigorous senior-level U.S.  endorsement. 
 
Accordingly, the provisional GATT continued to serve as the forum for 
international trade negotiations--until the World Trade Organization came 
into being in January 1995.  The United States--through GATT--endorsed 
trade liberalization.  Aaronson does not seem to recognize the importance 
of the 1962 U.S. Trade Expansion Act.  She does not document the history of 
the "fast-track" provision in American trade legislation.  A chapter on 
U.S. public policies and public opinion on trade covering the years 1950 to 
1994 has only ten pages, of which eight are devoted to 1992-1994.  This 
chapter is followed by a short one on the U.S. approval of entry into the 
WTO. 
 
Aaronson's book gives her reader a detailed study of a failed policy 
initiative (U.S. membership in the ITO) and how an unanticipated 
alternative (GATT) was established.  GATT did achieve the national goal of 
more open world trade.  When WTO came into existence, many Americans feared 
their country would be at the "mercy" of an international organization or 
international forces (an echo of earlier isolationism). Some of the 
concerns over WTO resembled those of past times; others were new, in 
particular the discussions of international labor and environmental 
standards.  The U.S. participation in the WTO was, however, symbolic of a 
policy consistency during the entire post-war era, that of U.S. advocacy of 
freer trade and of keeping the frequently-surfacing and ever-present-calls 
for protectionism at bay. 
 
Copyright (c) 1997 by EH.Net and H-Net, all rights reserved.  This work may 
be copied for non-profit educational use if proper credit is given to the 
author and the list.  For other permission, please contact 
[log in to unmask] (Robert Whaples, Book Review Editor, EH.Net. 
Telephone: 910-758-4916. Fax: 910-758-6028.) 
 
============ FOOTER TO HES POSTING ============ 
For information, send the message "info HES" to [log in to unmask] 

ATOM RSS1 RSS2