Instituting Trade in the Long Nineteenth Century
Chapter 3: Trading Free and Opening Markets
3. Trading free and opening markets Fiona McGillivray One theme of this volume is how institutions structure political conﬂict over trade policy. Institutions aﬀect who makes the decisions and what motivates them. Therefore, an institutional change can lead to a radical alteration in policy. Since trade is a two-way exchange, such institutional change within one partner can aﬀect the entire nature of trading relationships. Institutional changes in one nation can have trade policy repercussions throughout its trading partners.1 The Reciprocal Trade Agreements Act of 1934, for example, was an institutional change that delegated authority for negotiating tariﬀs from Congress to the President. This legislative rule change in the USA not only helped liberalize US trade, it helped liberalize world trade (Bailey, Goldstein and Weingast, 1997). In this chapter, I take a step further back in US history to focus on an earlier institutional change; one that also restructured conﬂict over trade policy within the USA and inﬂuenced foreign nations’ trade policy. In 1783, at the end of the revolutionary war, the USA was a loose confederation of 13 states. When the USA switched from the Articles of Confederation to the Constitution in 1789, authority for interstate and foreign trade shifted from decentralized political control – 13, largely independent and autonomous states – to centralized political control – a Federal Congress.2 It was anticipated that this rule change would alter the asymmetric nature of trading relationship between the US states and Britain. A common external tariﬀ would create...
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