Clashing Over Commerce: A History of US Trade Policy (Markets and Governments in Economic History)

by Douglas A. Irwin

What was happening to make Congress adopt a more protectionist outlook? Ever since the Reciprocal Trade Agreements Act in 1934, Congress had taken a step back from active control over trade policy. Although it refused to endorse the International Trade Organization in the 1940s and other trade initiatives in the 1950s, Congress had accepted most executive branch actions on trade policy. The Mills bill of 1970 represented a reassertion of congressional authority to regulate trade and threatened a significant departure from the trade policies established after World War II. This change reflected an important new development: some domestic industries were now facing much greater foreign competition than they had seen in many decades, if ever. Trade politics was about to become much more difficult simply because imports were starting to play a much larger role in the economy. After World War II, imports were less than 3 percent of GDP, an unusually low level in historical terms. Because the economic recovery of Western Europe and Japan from the war had taken so long, imports as a share of GDP were no higher in 1965 than they had been in 1950. Starting in the mid-1960s, however, imports began to rise while exports remained at about the same proportion of GDP.