The Institutional Foundation of U.S. Trade Policy: Revisiting Explanations for the 1934 Reciprocal Trade Agreements Act

Abstract

In the 1934 Reciprocal Trade Agreements Act (“RTAA”), Congress delegated its constitutionally granted power to set tariffs to the President. Trade agreements negotiated under the RTAA required no ex post congressional approval. Instead, the broad authority conferred upon the President was subject to congressional renewal every three years. Tariff reductions also were no longer made unilaterally via omnibus tariff legislation, but rather bilaterally via trade agreements and in exchange for comparable tariff reductions from foreign trading partners. The RTAA dramatically altered the governance structure that had controlled U.S. trade policymaking for over a century, laying a new institutional foundation that made U.S. postwar participation in, and leadership of, global trade liberalization and expansion possible. Indeed, the RTAA is arguably the most important piece of trade legislation of this century. It also is an unusual case of congressional delegation of policymaking authority to the President. Representative Hamilton Fish (R-N.Y.) called the RTAA “a betrayal of our representative form of government [that] amounts to an open admission by Congress that … it is now incompetent and unfit to legislate properly, intelligently and in the public interest.” The press described the RTAA as a “radical departure in commercial policy.” What accounts for this extraordinary delegation, especially by a legislative body better known for guarding its power than for giving it away?