will be made to any foreign country except on articles of which that country is the chief source of imports into the United States. An examination of the trade of the United States discloses hundreds of products which are imported predominantly from single countries. Frequently the bulk of the dutiable imports from a given country is composed of articles predominantly imported from that country. recent tabulation shows that the United States dutiable imports in 1931 from 29 countries were composed to the extent of from 48 percent to 93 percent of articles of which each country respectively was the chief source of supply for the United States. These 29 countries supplied over 96 percent of our dutiable imports, so that it can be readily seen that the list includes the more important trading nations. From the 29 the total dutiable imports were $671,000,000, and taking for each country only those articles in which it was the leading source of imports to the United States, the value was found to be $480,000,000, or 71 percent of the value of total dutiable imports from the 29 countries. Further, the trade statistics contain some headings which comprise classes of articles rather than individual articles, and in making reciprocity treaties these classifications might be subdivided (as is done in European treaties) so as to give a higher percentage of articles each of which is imported predominantly from a single foreign country. These figures indicate the feasibility of bargaining under a system of confining the concessions made to any country primarily to articles of which that country is the leading source of imports; that is, they indicate this feasibility on the assumption that concessions on wide ranges of articles are feasible. THE PADDING OF TARIFF RATES IN PREPARATION FOR BARGAINING Unless a reciprocity policy is handled with skill it may succeed in obtaining no concessions other than removal of those high rates, trade barriers, and discriminations which foreign countries have erected or maintained for the very purpose of bargaining them away. In summing up its examination of the results of German tariff bargaining the United States Tariff Commission wrote in 1919: The considerations which rendered impossible an accurate appraisal of the success of German policy in connection with the Caprivi treaties apply likewise to an inquiry with regard to the later developments. In the interval, however, a new element of difficulty had been injected. The rates in the statutory tariffs of other countries had ceased to be what they had once been, those thought best for purposes of revenue or protection. Under the compelling influence of the German policy they had become bargaining rates. They were made, not to be maintained, but for purposes of negotiation. The States of Europe were no longer following the business principle of a "fixed price. Each had now for favors to be granted its "asking price" and a "selling price", the latter more or less definite and considerably lower. Because of this fact, it is impossible to estimate in figures the success of German policy. An index is given neither by the number of rates agreed to by foreign States in response to German representations, nor by the number of rates reduced or the extent of the reductions. The success of a policy can not be estimated on the basis of its removal of obstacles which it has itself created." Since 1919 there is evidence that the increasing of tariff rates and the erection of barriers, principally for use in bargaining, has grown rather than diminished.10 Accordingly, the difficulty of making a reciprocity policy yield net reductions in foreign tariffs has increased rather than diminished as the bargaining countries have attained greater experience. At this moment when so many countries are maintaining emergency tariff rates and trade barriers, care must be taken to avoid the possibility that the United States would obtain in return for its tariff concessions only the abandonment of measures too cumbersome and oppressive, and of tariff rates too high, to outlast the depression. For example, the tariff rates imposed by certain European countries on wheat as measures of price stabilization and to save their producers from the effects of the abnormally low price of the commodity will inevitably be reduced if and when there is a substantial increase in the world price for cereals; and reciprocal tariff agreements by which concessions were made in return for the reduction of such temporary duties might mean the grant of valuable concessions in return for totally illusory concessions. In fact a worse result might follow from a reciprocity policy announced but not rapidly executed. It might be the cause of prolonging the existence of emergency rates which foreign countries desired in their own interests to reduce. An incident of this kind which occurred in 1891 is thus narrated in Reciprocity and Commercial Treaties (p. 473): The German harvest had been bad, times were hard, and there was sore need of an increase in the supply of breadstuffs, but the high duties on grain prevented the importation of food in the quantities needed. The Government was urged from all sides, even by Count Kanitz, one of the leaders of the agrarian party, to reduce the grain duties for the relief of the people. It refused to make the reduction, because this action, desirable as it might be from the standpoint of the German consumer, was also desired by other countries which had a surplus of breadstuffs to export; and the Government would have lost an advantage in bargaining with foreign producers if it had framed its policy solely with respect to the immediate interest of domestic consumers. SUMMARY OF RECIPROCITY EXPERIENCES OF THE UNITED STATES RECIPROCITY TREATIES The United States Tariff Commission published in 1919 a volume of some 500 pages, entitled "Reciprocity and Commercial Treaties". This volume reviewed and analyzed the experiences of the United States with the policy of reciprocity. No attempt is made in this memorandum to review the field, but it may be useful to enumerate the successful and unsuccessful attempts at reciprocity negotiations made during the last century. The reciprocity treaties which were actually completed by the United States have been only three in number, in spite of the fact that throughout the whole period prior to 1922 the United States was making only conditional most-favored-nation treaties of which the logical concomitant is an active policy of tariff bargaining. The three "reciprocity treaties which were carried to completion were as follows: With Canada and Newfoundland, 1854, effective 1855–66; See, for example, "European Bargaining Tariffs", published as a preparatory document for the World Economic Conference of 1927; written by Benjamin B. Wallace and transmitted by T. W. Page. 11 In addition to these three reciprocity treaties, two special reciprocity provisions of 1831 and 1871 may be mentioned. The treaty with France, signed July 4, 1831, provided for the settlement of claims of citizens of the two countries; the French Government agreeing to pay 25,000,000 francs and the American Government agreeing to pay 1,500,000 francs. Incidental to this settlement of claims it was provided that for 10 years the with Hawaii, 1875, effective 1876-1900; and with Cuba, 1902, effective December 27, 1903. The treaty with Cuba alone continues in force. The treaty with Hawaii continued until after the annexation of that Territory 12 The treaty with Canada was denounced by the United States, though it would appear from Reciprocity and Commercial Treaties that political reasons were largely responsible. quote from page 73: We During the interim the ill feeling against Canada and Great Britain was greatly stimulated by the lawless acts along the Canadian border of sympathizers with the Confederacy, acts which had become so menacing that President Lincoln had deemed it necessary to address a note on the subject to the British Government. * * Profoundly exasperated by these "assaults and depredations," the House reversed its vote of the previous May and passed, on December 13, 1864, by a vote of 85 to 57, Mr. Morrill's joint resolution for unconditional notice of abrogation. The fruitless attempts at reciprocity treaties have been much more numerous. The following list includes the treaties negotiated under the general treaty-making powers of the Executive: Date 1844 1855 1867 1875 Country and scope of treaty ! German Zollverein: Free entry of American cotton, no Canada: Exchange of free lists (Canadian free list to be 1883 Mexico: Exchange of extensive free lists... 1884 Spain (for Cuba and Puerto Rico): Free sugar and 50 percent reduction on tobacco versus reductions or remissions on a considerable number of American products. 1884 1888 1890 1902 Dominican Republic: Very similar to above.. Result Rejected by the Senate. Do. Do. Do. Ratified by the Senate, but Congress failed to enact necessary legislation. Withdrawn by President Cleveland. Do. Rejected by the Senate. Not ratified by Great Britain. Amended by the Senate and made unacceptable to Newfoundland. 1 In 1857 the American Minister in Mexico negotiated a treaty providing for an extensive list of articles to be freely exchanged across the land frontier only. This negotiation had not been authorized by the President and was not submitted by the President to the Senate. It has not been included in the list. It appears therefore that in a period of some 60 years, 10 reciprocity treaties were negotiated under the general treaty powers which did not become effective. Out of the 10, 2 were rejected by the foreign wines of France should be admitted to the United States at the rate of 6 cents a gallon for red wines in casks; 10 cents a gallon for white wines in casks; and 22 cents a gallon for wines of all sorts in bottles; and that if the general rates of the tariff effective Jan. 1, 1829, should be reduced the rates on French wines should be reduced in proportion. In consideration of this stipulation, the French Government abandoned the "reclamations which it had borne in relation to the eighth article of the Treaty of Louisiana" and engaged to establish on long staple cotton of the United States, brought directly to France by the vessels of the United States or by French vessels, the same duties as on short staple cottons. The Treaty of Washington, 1871, settled many outstanding issues with Great Britain. It contains 43 articles covering the disposition of the Alabama claims, fishery rights on both sides, navigation of the St. Lawrence and of Lake Michigan, transit trade through the United States or Canada, and the arbitration of the disputed boundary through Vancouver Strait. In addition to the matters just enumerated, the treaty provided for the exchange, free of customs duties, of the fish of the United States and of Canada and Newfoundland. The treaty was proclaimed July 4, 1871, and the article relating to the free exchange of fish was terminated on July 1, 1885, by notice previously given in pursuance of a joint resolution of Congress of Mar. 3, 1883. The original treaty was extended in 1884-1887, and largely for political reasons, including the acquisition by the United States of Pearl Harbor as a coaling and repair station. "Reciprocity and Commer cial Treaties", pp. 114-116. country, 2 were negotiated by one President but not accepted by his successor, and the other 6 were suppressed by congressional action or inaction-4 were rejected by the Senate, 1 failed for lack of the necessary legislation, and 1 because amendment by the Senate had made it unacceptable to the other country. The Tariff Act of 1897 contained a direct authorization to the Executive to negotiate reciprocity treaties, with the limitation that no concession exceeding 20 percent of the rates contained in said tariff act should be made, except that natural products of the foreign country not produced in the United States might be transferred to the free list. Such explicit authorization of course adds nothing to the constitutional right of the President to negotiate treaties, but it would seem to indicate an intention on the part of Congress to make effective treaties negotiated within these limitations. Within this authorization the 11 Kasson treaties were negotiated with France, Argentina, Ecuador, Nicaragua, Dominican Republic, Denmark for St. Croix, Great Britain for Bermuda, Jamaica, Barbados, British Guiana, Trinidad.13 These treaties conceded reductions which in many cases were much less than 20 percent of the statutory tariff rates and which covered limited sections of the tariff, but none of them came to a vote in the Senate, in spite of the recommendations of President McKinley and President Theodore Roosevelt. It may be seen that it has been a matter of some difficulty and delicacy to obtain reciprocity treaties which would satisfy both parties to the treaty. During the last century with three exceptions all attempts on the part of the United States to complete reciprocity treaties have been abortive. The scattered successes have been with near neighbors and have been enacted perhaps as much for political as for economic reasons. Out of 21 abortive treaties, 16 failed because of opposition in the Senate (a two-thirds majority being required for ratification), being either rejected or allowed to die without a vote. RECIPROCAL EXECUTIVE AGREEMENTS In marked contrast to the fate of the attempted reciprocity treaties. is the record of Executive agreements under specific authorization by Congress. Under the Tariff Act of 1890, 13 such agreements were negotiated and only 1 failed to become effective, due to nonratification by the other country. Under the Tariff Act of 1897, Executive agreements were made with nine countries. These agreements. under both acts were all of limited scope, as briefly set forth below. The Tariff Act of 1890 included in the free list sugar and molasses, tea and coffee, hides and skins. The President, however, was empowered to negotiate for concessions from countries producing these articles, and, if dissatisfied with the concessions offered, was authorized to proclaim rates of duty specified in the tariff act on such articles. produced by countries whose tariffs remained "reciprocally unequal and unreasonable." This method constitutes a threatening or penalizing approach to reciprocity. 18 The treaty with Great Britain for Trinidad was not submitted to the Senate. The earlier treaties of the series had not been ratified and Trinidad refused to extend the time for ratification. This treaty is therefore included among those killed by the Senate. Under this provision 13 agreements were negotiated between January 31, 1891, and May 25, 1892, and they became effective on signature or shortly thereafter, except in the case of Costa Rica which failed to ratify the agreement. The agreements were made with the following countries and for the concessions indicated: These agreements were terminated abruptly when the United States imposed a general duty on sugar by the Tariff Act of August 27, 1894. The Tariff Act of 1897 authorized the Executive to apply reduced rates of duty specified in the act, on argols, spirits, wines, paintings, drawings, and statuary, in return for concessions deemed by the President to be reciprocal and equivalent. The agreements required no congressional action, and agreements or supplementary agreements were made in two series as follows: Portugal, Germany, Spain, and Bulgaria conceded most-favorednation treatment, other countries conceded for the most part unimportant and nominal concessions. These agreements were terminated by the Tariff Act of 1909. The United States has had one other reciprocity experience. In 1911 a reciprocity agreement was concluded with Canada, but it was not put in the form of a treaty. It remained a purely informal agreement to be put into effect by concurrent legislation in the two countries. The necessary legislation was enacted by the American Congress but failed of enactment in Canada. The past experience of the United States with respect to the difficulty of obtaining reciprocal tariff concessions by means of treaties and the greater success in negotiating Executive agreements under previous authorization by the Congress may be significant as a guide to future policy regarding methods of tariff bargaining. The tariff law of 1930 confers upon the President no special powers in regard to tariff bargaining. It confers upon the President certain powers in the so-called "flexible tariff" provision, as also in the sections relating to unfair competition and to foreign discriminations against American exports, but these powers are not adapted to the negotiation of reciprocity treaties. Decisions made under the Tariff Acts of 1890 and 1897 show that it is constitutional for Congress to define either specific reductions to be made or maximum reductions |