American trade
From Wikipedia, the free encyclopedia
American Trade, the trade that the United States has with foreign nations or within itself. The Government actively promotes exports and seeks to prevent foreign countries from maintaining trade barriers that restrict imports.
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[edit] Embargo Act of 1807
Embargo Act of 1807 was designed to force Britain to rescind its restrictions on American trade, but failed, and was repealed in early 1809.
[edit] International Trade Theory
In 1776, Adam Smith published the paper An Inquiry into the Nature and Causes of the Wealth of Nations. It criticised Mercantilism, and argued that economic specialization could benefit nations just as much as firms. Since the division of labour was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labour more efficiently and thereby become more productive. Smith said that he considered all rationalizations of import and export controls "dupery", which hurt the trading nation at the expense of specific industries.
In 1799, the Dutch East India Company, established on March 20, 1602, when the Estates-General of the Netherlands granted it a 21-year monopoly to carry out colonial activities in Asia, formerly the world's largest company, became bankrupt, partly due to the rise of competitive free trade.
[edit] Ricardo, Mill and Torrens
In 1817, David Ricardo, James Mill and Robert Torrens showed that free trade might benefit the industrially weak as well as the strong, in the famous theory of comparative advantage. In Principles of Political Economy and Taxation Ricardo advanced the doctrine still considered the most counterintuitive in economics:
When an inefficient producer sends the merchandise it produces best to a country able to produce it more efficiently, both countries benefit.
The ascendancy of free trade was primarily based on national advantage in the mid 19th century. That is, the calculation made was whether it was in any particular country's self-interest to open its borders to imports.
[edit] John Stuart Mill
John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate the terms of trade through maintaining tariffs, and that the response to this might be reciprocity in trade policy. Ricardo and others had suggested this earlier. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would accrue to a country following reciprocal, rather than completely free, trade policies.
This was followed within a few years by the infant industry scenario developed by Mill anticipated New Trade Theory by promoting the theory that government had the "duty" to protect young industries, although only for a time necessary for them to develop full capacity. This became the policy in many countries attempting to industrialize and out-compete English exporters.
[edit] Great Depression
The Great Depression was a major economic recession that ran from 1929 to the late 1930s. During this period, there was a great drop in trade and other economic indicators.
The lack of free trade was considered by many as a principal cause of the depression, and World War II. During the war, in 1944, 44 countries signed the Bretton Woods Agreement, intended to prevent national trade barriers, to avoid depressions. It set up rules and institutions to regulate the international political economy: the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank and Bank for International Settlements). These organizations became operational in 1946 after enough countries ratified the agreement. In 1947, 23 countries agreed to the General Agreement on Tariffs and Trade to promote free trade.
[edit] American Trade Mentioned in the Constutution
The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
-Article I, Section 8, Paragraph 1.
[edit] See also
- United States trade policy
- trade wars
- Tariff in American history
- Mergers
- United States-Vietnam Bilateral Trade Agreement
