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Multilateralism, Regionalism, and Bilateralism

Multilateralism, Regionalism, and Bilateralism


One other principle the United States traditionally has followed in the trade arena is multilateralism. For many years, it was the basis for U.S. participation and leadership in successive rounds of international trade negotiations. The Trade Expansion Act of 1962, which authorized the so-called Kennedy Round of trade negotiations, culminated with an agreement by 53 nations accounting for 80 percent of international trade to cut tariffs by an average of 35 percent. In 1979, as a result of the success of the Tokyo Round, the United States and approximately 100 other nations agreed to further tariff reductions and to the reduction of such nontariff barriers to trade as quotas and licensing requirements.

A more recent set of multilateral negotiations, the Uruguay Round, was launched in September 1986 and concluded almost 10 years later with an agreement to reduce industrial tariff and nontariff barriers further, cut some agricultural tariffs and subsidies, and provide new protections to intellectual property. Perhaps most significantly, the Uruguay Round led to creation of the World Trade Organization, a new, binding mechanism for settling international trade disputes. By the end of 1998, the United States itself had filed 42 complaints about unfair trade practices with the WTO, and numerous other countries filed additional ones -- including some against the United States.

Despite its commitment to multilateralism, the United States in recent years also has pursued regional and bilateral trade agreements, partly because narrower pacts are easier to negotiate and often can lay the groundwork for larger accords. The first free trade agreement entered into by the United States, the U.S.-Israel Free Trade Area Agreement, took effect in 1985, and the second, the U.S.-Canada Free Trade Agreement, took effect in 1989. The latter pact led to the North American Free Trade Agreement in 1993, which brought the United States, Canada, and Mexico together in a trade accord that covered nearly 400 million people who collectively produce some $8.5 trillion in goods and services.

Geographic proximity has fostered vigorous trade between the United States, Canada and Mexico. As a result of NAFTA, the average Mexican tariff on American goods dropped from 10 percent to 1.68 percent, and the average U.S. tariff on Mexican goods fell from 4 percent to 0.46 percent. Of particular importance to Americans, the agreement included some protections for American owners of patents, copyrights, trademarks, and trade secrets; Americans in recent years have grown increasingly concerned about piracy and counterfeiting of U.S. products ranging from computer software and motion pictures to pharmaceutical and chemical products.


Next Article: Current U.S. Trade Agenda

This article is adapted from the book "Outline of the U.S. Economy" by Conte and Carr and has been adapted with permission from the U.S. Department of State.

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