Difficult Hegemony Conversion

In the earlier period of Great Depression in 1930s, The United States insisted on adopting nationalistic economic policy, which not only stimulated the turbulence of international relations but also deferred the recovery of American economy. But the lesson of Great Depression gradually changed the Americans'view about the U.S. economic relationship with the rest of the world. In 1934, Roosevelt administration urged on Congress passing Reciprocal Trade Agreement Act, which authorized the President to negotiate trade agreements with foreign countries on the basis of cutting no more than 50% of American tariffs. The main purpose of RTAA was to promote the American export, but it could also improve international trade relations. In 1936, President Roosevelt played an active role in the Tripartite Financial Stabilization Agreement among the U.S., U.K. and France. These actions had shown the preliminary sense of"American responsibility"about the international economic relationship, nevertheless, American aim of expanding export was impeded by British Imperial Preferential System. The Anglo-American Trade Agreement of 1938 didn't shake the basis of that system. Obviously, there must be conflicts between the U.S. nondiscriminatory multilateral freer trade and the discriminatory Imperial Preferential System. The coming war offered the United States god-given opportunity to smash the system. In their Mutual Aid Agreement negotiations, the United States forced Britain to abolish Imperial Preferential System after the Second World War and to cooperate to establish a nondiscriminatory multilateral global trade system. That was the nucleus of"Article Seven"in the Mutual Aid Agreement in 1942. Further more, the United States included the similar"Article Seven"in all the Lend-lease Agreements. Therefore, the United States had transformed its sense of responsibility into actual practice of monitoring the new international trade regime. However, Britain didn't think that accepting"Article Seven"meant giving up the Imperial Preferential System.From 1943 to 1945, there were a series of commercial policy talks about"Article Seven"between the United States and Great Britain. During these talks, the United States endeavored in vain to translate the principle of"Article Seven"into specific commercial agreement. The British were reluctant to abandon imperial preferences even in its Meade-Overton Report which contained the most features of multilateralism, but they persisted in cutting the American tariffs horizontally or in a certain high percentage form. The United States required the British to abolish the imperial preferences, whereas the RATT extension in 1945 forbade the horizontal cut of American tariffs. It was until the difficult negotiation of Anglo-American Financial Agreement in the December of 1945 that the two countries reached an understanding on commercial policy. The British promised in common with the Americans to use its best endeavors to establish an International Trade Organization (ITO) according to American"Proposals".But being the former international trade hegemony, Britain interpreted the understanding as a means to promote its position in international trade. In the consequent United Nations Conferences on Trade and Employment, which were held successively in London, Geneva and Havana, the British tried their best to add escape clauses on difficult balance of payments and to enlarge the scope of discriminatory quantitative restrictions in the Charter of International Trade Organization. Moreover, with the help of Commonwealth countries, Britain successfully incorporated in ITO Charter the requirements of full employment, which implied that the United States would have to accept the obligation of full employment. In the first round of GATT talks in Geneva, the United States and Britain disputed over the"full compensation"between tariff cutting and preference abolishing or preference diminishing. In order to achieve an agreement, the Americans had to make concessions to the British. In the negotiations of ITO Charter, the underdeveloped countries also sought favorable clauses to their"economic development". During the Havana Conference, the United States conceded to the Latin American countries and the industrialized countries because of their respective desire of economic development and reconstruction. Thus, the United States had always been in a defensive position in the negotiations of ITO Charter because the Americans were eager to end these conferences with certain agreements. In order to establish the U.S. dominating position in international trade institution, any failure of these conferences would mean the winding-up of the objective. Meanwhile, in the background of Cold War, any failure would have serious political repercussions. In Cold War, Britain was the key ally of the United States. Although the United States emphasized to limit the British trade policy choice, compromises were always made at the last moment. As a result, ITO Charter was full of escapes, loopholes and governmental controlling features, which deviated from American principles of market and nondiscriminatory multilateral trade.With the escalating of Cold War, Marshall Plan, Point Four, NATO and the RATT extensions took the priority over ITO Charter in the eyes of Truman Administration or Congress. Besides, during the House hearings of ITO Charter, the clauses about full employment, economic development and international investment were the most controversial ones and they received much of the censure. And to make matters worse, the American commerce circle, who had been advocating multilateral freer trade, opposed the Charter. Though strenuous efforts had been made to achieve agreements between free market and governmental intervention in the Charter's negotiations, the shifted attitudes of the American commerce circle indicated the uneasy balance between any government's domestic obligations and its international objectives. During the negotiations of ITO Charter, the British inexorable rejection was the major cause of ITO Charter's failure in Congress. The United States could not accomplish its broad aim of dominating the international trade institution which was represented in ITO. But ITO was of great significance, at least to later trade agreements and to the ways of problem-solving in the process of globalization. Aside from this, the provisional application of GATT in a less extent continued the multilateral principles of ITO.