Click here to view the full text of this article as an Adobe Acrobat PDF.

From the 1940s, when the postwar multilateral trading system was founded around the rump provisions of the General Agreement on Trade and Tariffs (GATT), to the mid-1980s, the United States steadfastly opposed derogations from MFN obligations and, therefore, most regional trading arrangements (Cold War exigencies account for the exception regarding
the formation and growth of the European Community).

Essentially, the US adhered to a two-track trade policy: (1) multilateralism, embodied in its membership in the GATT and in its leadership in eight rounds of trade-liberalizing GATT negotiations; and (2) unilateralism-bilateralism, dictated by the substantive reality that GATT did not cover key trading sectors and thus powerful domestic interests demanded that US political leaders pursue independent bilateral negotiations--particularly with Japan and the EC--to achieve trade policy goals beyond multilateral disciplines. Unilateralism was linked directly to bilateral negotiations as the US also reserved the right to act on its own by enforcing its will should bilateral negotiations fail.

Change came during the 1980s as the US essentially drifted into regional alternatives through a combination of diverse forces and unlinked events. The seeds of this broadened trade policy agenda could be found in United States Trade Representative (USTR) William Brock’s call in 1982 for a GATT-plus negotiation (conditional MFN) if efforts for a new multilateral trade round failed; but Brock’s move was actually a tactical means of forcing action at the multilateral level, not the signal for a change in the fundamental priorities of US trade diplomacy. Similarly, the decision to sign a bilateral FTA with Israel in 1983 was motivated entirely by political and security interests, not trade policy considerations. Finally, the fi rst economically significant FTA initiatives--US-Canada and US-Canada-Mexico (NAFTA)--were proposed by Canada and Mexico respectively, and not by the United States.

By the late 1980s, however, other forces were coming into play that would induce the United States to introduce bilateral and regional agreements permanently into its portfolio of trade instruments. In Europe, the EC seemed fi nally to be moving toward significant economic union, with the successful campaign for EC 1992 and later the signing of the Maastricht Treaty. The United States, thus, for the first time in the postwar period faced a trading partner with economic power equal to its own.

Claude Barfield is a resident scholar at AEI.

Click here to view the full text of this article as an Adobe Acrobat PDF.