《国际政治经济学》文献资料（Institutions and International Political Economy）The Magic Bullet. The RTAA, Institutional Reform, and Trade Liberalization.pdf

The Magic Bullet?The RTAA, Institutional Reform, and Trade Liberalization Michael J.Hiscox Introduction The Reciprocal Trade Agreements Act (RTAA)of 1934 has long been heralded as a simple institutional reform with revolutionary consequences.It is typically por- trayed as a clever maneuver that,by shifting authority over trade policy from Con- gress to the president,fundamentally altered the nature of the policymaking process and drastically changed the future course of U.S.trade relations.Wedded to high levels of tariff protection for most of its history,the United States began a steady process of tariff reduction after 1934 that helped to transform the international economy. The connection between the RTAA and the shift in policy seems obvious.How else can we explain the sudden swing toward liberalization after 1934 than by refer- ence to the institutional change of 1934?Why else would there be a sudden move- ment away from a seemingly robust protectionist equilibrium?In the political- economy literature,the standard explanation for inefficient protectionism is that the benefits of tariffs are concentrated among producers in import-competing industries, whereas the costs are dispersed among producers in other industries and consumers; so the former find it easier to organize collectively to influence policy to their advan- tage.An escape from this political trap is likely only if some change in the institu- tions that govern policymaking can provide greater political weight to members of the large free-trade bloc. The conventional wisdom on the RTAA relies on two versions of this same claim. The first version focuses on how delegating authority to the president eliminated protectionist logrolling and made more salient the costs of tariffs to consumers that would otherwise have been neglected because they were dispersed across electoral An earlier version of this article was presented at the 93d Annual Meeting of the American Political Science Association,Washington,D.C.,1997.I thank David Lake,Peter Gourevitch,and two anonymous reviewers for helpful comments. International Organization 53,4,Autumn 1999,pp.669-698 1999 by The IO Foundation and the Massachusetts Institute of Technology

The Magic Bullet? The RTAA, Institutional Reform, and Trade Liberalization Michael J. Hiscox Introduction The Reciprocal Trade Agreements Act (RTAA) of 1934 has long been heralded as a simple institutional reform with revolutionary consequences. It is typically portrayed as a clever maneuver that, by shifting authority over trade policy from Congress to the president, fundamentally altered the nature of the policymaking process and drastically changed the future course of U.S. trade relations. Wedded to high levels of tariff protection for most of its history, the United States began a steady process of tariff reduction after 1934 that helped to transform the international economy. The connection between the RTAA and the shift in policy seems obvious. How else can we explain the sudden swing toward liberalization after 1934 than by reference to the institutional change of 1934? Why else would there be a sudden movement away from a seemingly robust protectionist equilibrium? In the politicaleconomy literature, the standard explanation for inefficient protectionism is that the benefits of tariffs are concentrated among producers in import-competing industries, whereas the costs are dispersed among producers in other industries and consumers; so the former find it easier to organize collectively to influence policy to their advantage. An escape from this political trap is likely only if some change in the institutions that govern policymaking can provide greater political weight to members of the large free-trade bloc. The conventional wisdom on the RTAA relies on two versions of this same claim. The first version focuses on how delegating authority to the president eliminated protectionist logrolling and made more salient the costs of tariffs to consumers that would otherwise have been neglected because they were dispersed across electoral An earlier version of this article was presented at the 93d Annual Meeting of the American Political Science Association, Washington, D.C., 1997. I thank David Lake, Peter Gourevitch, and two anonymous reviewers for helpful comments. Interrzcrtionnl Orgnnizntion 53, 4,Autumn 1999, pp. 669-698 o 1999 by The I0 Foundation and the Massachusetts Institute of Technology

670 International Organization districts.The second version emphasizes how empowering the president to negoti- ate trade agreements that elicited reciprocal tariff reductions from other nations gen- erated larger gains for,and thus more political support from,export interests.2 I argue that,though these accounts provide sound reasons why the RTAA might have helped to produce more liberal policy outcomes ex post facto,they fail to pro- vide an adequate explanation for just how the institutional innovation was achieved and sustained in the face of protectionist opposition.Instead,a closer examination of the changing nature of the underlying trade policy coalitions,and their relationships with the two parties,makes more sense of the American experience.The RTAA system was instituted by a Democratic majority with a core constituency of interests that favored more liberal trade policies and hoped to make them more resilient to Republican majorities in the future.But it narrowly survived the Republican majori- ties that did follow in the 1940s and 1950s only because growing divisions over the trade issue arose within the Republicans'electoral base.These changes reflected the dramatic,exogenous effects of World War II on U.S.export and import-competing industries as well as longer-term shifts in U.S.comparative advantage and in party constituencies.In this alternative account of the RTAA and U.S.trade liberalization, the historical coincidence of several profound economic and political changes are central to the eventual outcome.As a consequence,the RTAA story offers few if any lessons for trade policy reform in the current system.It does emphasize,how- ever,that since trade liberalization was driven by a particular alignment of societal coalitions in the past,it might well be stymied or reversed by a different alignment in the future.This possibility for change is ruled out by conventional accounts of the RTAA. In the next section I briefly discuss the origins of the RTAA and the evidence that it coincided with a dramatic shift in U.S.trade policy.The third section examines the claim that the reform was essentially a congressional act of self-restraint,aimed at eliminating logrolling in tariff legislation by delegating authority over policy to the president.The fourth section then considers an alternative claim that the reform was a Democratic ploy to swing the political balance in favor of free-trade interests by basing trade policymaking on reciprocal concessions negotiated by the executive branch.I show that neither view fits well with the record of congressional voting on trade bills during the last century.Moreover,both stories neglect important exog- enous changes in party constituencies and societal preferences that had crucial ef- fects on congressional votes to extend the RTAA authority and liberalize trade after 1945.In the fifth section I develop this point in more detail by outlining a simple model of distributive conflict over trade and its manifestation within Congress.The model emphasizes the role of dynamic shifts in the preferences of societal groups, and the positions taken by the parties,in the evolution of U.S.trade policy. 1.Lohmann and O'Halloran 1994. 2.Bailey,Goldstein,and Weingast 1997

670 International Organization districts.' The second version emphasizes how empowering the president to negotiate trade agreements that elicited reciprocal tariff reductions from other nations generated larger gains for, and thus more political support from, export interests2 I argue that, though these accounts provide sound reasons why the RTAA might have helped to produce more liberal policy outcomes ex post facto, they fail to provide an adequate explanation for just how the institutional innovation was achieved and sustained in the face of protectionist opposition. Instead, a closer examination of the changing nature of the underlying trade policy coalitions, and their relationships with the two parties, makes more sense of the American experience. The RTAA system was instituted by a Democratic majority with a core constituency of interests that favored more liberal trade policies and hoped to make them more resilient to Republican majorities in the future. But it narrowly survived the Republican majorities that did follow in the 1940s and 1950s only because growing divisions over the trade issue arose within the Republicans' electoral base. These changes reflected the dramatic, exogenous effects of World War I1 on U.S. export and import-competing industries as well as longer-tern1 shifts in U.S. comparative advantage and in party constituencies. In this alternative account of the RTAA and U.S. trade liberalization, the historical coincidence of several profound economic and political changes are central to the eventual outcome. As a consequence, the RTAA story offers few if any lessons for trade policy reform in the current system. It does emphasize, however, that since trade liberalization was driven by a particular alignment of societal coalitions in the past, it might well be stymied or reversed by a different alignment in the future. This possibility for change is ruled out by conventional accounts of the RTAA. In the next section I briefly discuss the origins of the RTAA and the evidence that it coincided with a dramatic shift in U.S. trade policy. The third section examines the claim that the reform was essentially a congressional act of self-restraint, aimed at eliminating logrolling in tariff legislation by delegating authority over policy to the president. The fourth section then considers an alternative claim that the reform was a Democratic ploy to swing the political balance in favor of free-trade interests by basing trade policymaking on reciprocal concessions negotiated by the executive branch. I show that neither view fits well with the record of congressional voting on trade bills during the last century. Moreover, both stories neglect important exogenous changes in party constituencies and societal preferences that had crucial effects on congressional votes to extend the RTAA authority and liberalize trade after 1945. In the fifth section I develop this point in more detail by outlining a simple model of distributive conflict over trade and its manifestation within Congress. The model emphasizes the role of dynamic shifts in the preferences of societal groups, and the positions taken by the parties, in the evolution of U.S. trade policy. 1. Lohmann and O'Halloran 1994. 2. Bailey, Goldstein, and Weingast 1997

Institutional Reform and Trade Liberalization 671 The Magic Bullet:The RTAA and the Death of U.S.(Tariff)Protectionism The immediate origins of the RTAA lie in the elections of 1932 in which the Demo- crats won massive majorities in both the House and Senate and installed Roosevelt in the White House.Trade policy initially took a backseat to the new administration's ambitious domestic plans,and Roosevelt himself backed away from staking out a clear position on the trade issue,but he did appoint Cordell Hull,long-time champion of the free-trade cause in Congress,as his secretary of state.Having reluctantly accepted that unilateral tariff reductions were politically impractical in the midst of recession,Hull began to champion bilateral agreements with trading partners as"the next best method''of reform.3 In 1933 he drafted a bill authorizing the president to negotiate such treaties.That bill became the basis for the RTAA,written as an amend- ment to the infamous 1930 Smoot-Hawley tariff laws and granting the president authority (for three years)to negotiate alterations of up to 50 percent in the existing import duties.When that initial authority expired in 1937,Congress renewed it and continued to do so in the decades that followed.In later years,the president's author- ity was expanded to cover negotiations over a range of nontariff barriers to trade, although various procedural and monitoring provisions were also introduced to con- strain executive behavior.4 The effects of the RTAA seem profound,at least prima facie.Between 1934 and 1939,twenty-two separate agreements reducing tariffs were negotiated under its au- thority.5 After World War II,extensions of the authority enabled both Democratic and Republican administrations to take a leadership role in negotiating multilateral tariff reductions in successive rounds of the General Agreement on Tariffs and Trade (GATT).Figure 1 plots the data on estimated levels of U.S.protection between 1824 and 1994,using standard measures of average ad valorem tariffs (the annual receipts from customs and import duties as a percentage of the annual value of all imports and the value of all dutiable imports).The case for 1934 as the beginning of a radical change in U.S.trade politics appears strong.Estimated tariffs reached peaks during the years of Republican control after the Civil War and between 1922 and 1930,and though the Democrats did lower protection significantly in 1894 and 1913 during their brief stints in power,a steady long-term reversal only began in the 1930s.6 Considerable caution is warranted here,however,in dealing only with these mea- sures of tariff levels.The standard estimates have been defended as a decent overall indicator of protection,?but they have significant weaknesses.One problem is that they can shift as a result of changes in the composition of imports:decreasing,for 3.Hul11948,356. 4.Destler1992,71-76. 5.Tasca 1938. 6.One problem with a straight"institutionalist"interpretation of events here is immediately apparent from Figure 1:in the pre-1934 period,in which the rules of tariff policymaking were essentially constant, policy nevertheless varied substantially.It is very difficult to classify this era as representative of one stable protectionist equilibrium. 7.0ECD1985

Institutional Reform and Trade Liberalization 671 The Magic Bullet: The RTAA and the Death of U.S. (Tariff) Protectionism The immediate origins of the RTAA lie in the elections of 1932 in which the Democrats won massive majorities in both the House and Senate and installed Roosevelt in the White House. Trade policy initially took a backseat to the new administration's ambitious domestic plans, and Roosevelt himself backed away from staking out a clear position on the trade issue, but he did appoint Cordell Hull, long-time champion of the free-trade cause in Congress, as his secretary of state. Having reluctantly accepted that unilateral tariff reductions were politically impractical in the midst of recession, Hull began to champion bilateral agreements with trading partners as "the next best method" of ref~rm.~ In 1933 he drafted a bill authorizing the president to negotiate such treaties. That bill became the basis for the RTAA, written as an amendment to the infamous 1930 Smoot-Hawley tariff laws and granting the president authority (for three years) to negotiate alterations of up to 50 percent in the existing import duties. When that initial authority expired in 1937, Congress renewed it and continued to do so in the decades that followed. In later years, the president's authority was expanded to cover negotiations over a range of nontariff barriers to trade, although various procedural and monitoring provisions were also introduced to constrain executive beha~ior.~ The effects of the RTAA seem profound, at least prima facie. Between 1934 and 1939, twenty-two separate agreements reducing tariffs were negotiated under its auth~rity.~After World War 11, extensions of the authority enabled both Democratic and Republican administrations to take a leadership role in negotiating multilateral tariff reductions in successive rounds of the General Agreement on Tariffs and Trade (GATT). Figure 1 plots the data on estimated levels of U.S. protection between 1824 and 1994, using standard measures of average ad valorem tariffs (the annual receipts from customs and import duties as a percentage of the annual value of all imports and the value of all dutiable imports). The case for 1934 as the beginning of a radical change in U.S. trade politics appears strong. Estimated tariffs reached peaks during the years of Republican control after the Civil War and between 1922 and 1930, and though the Democrats did lower protection significantly in 1894 and 1913 during their brief stints in power, a steady long-term reversal only began in the 1930~.~ Considerable caution is warranted here, however, in dealing only with these measures of tariff levels. The standard estimates have been defended as a decent overall indicator of pr~tection,~ but they have significant weaknesses. One problem is that they can shift as a result of changes in the composition of imports: decreasing, for 3. Hull 1948,356. 4. Destler 1992, 71-76. 5. Tasca 1938. 6. One problem with a straight "institutionalist" interpretation of events here is immediately apparent from Figure 1: in the pre-1934 period, in which the rules of tariff policymaking were essentially constant, policy nevertheless varied substantially. It is very difficult to classify this era as representative of one stable protectionist equilibrium. 7. OECD 1985