US-EU Trade in Historical Perspective: Kennedy and Nixon

In his 2013 State of the Union Address, U.S. President Barack Obama announced that the United States would enter into trade talks with the European Union. Talks for the Trans-Atlantic Trade and Investment Partnership Agreement are expected to begin by June 2013.

While this would be the first free trade agreement between two of the world’s largest economies, it is not the first attempt at formalizing their trade relations. In fact, the United States has proposed initiatives to deepen economic ties with Europe over the past five decades.

International Trade Examiner presents the historical trade relationship between the United States and Europe in the post-WWII era through the 21st century in three parts: 1) Trade Initiatives (1960s-1970s), 2) Trans-Atlantic Trade Institutions (1990s), and 3) Free Trade Agreement (2000s).

Today’s post begins with the efforts to promote U.S. exports in the European market by former Presidents John F. Kennedy and Richard M. Nixon.

Grand Design (1962)

Going as far back as the 1960s, the United States sought to establish trade ties with the European Economic Community (EEC), which is the present-day European Union (EU). The economic realities of the new global economy resulted in an economically interdependent relationship between the EEC and the United States. The new global economy was one in which both economies shifted away from the protectionism of the 1930s toward a liberal trade market after World War II. Europe sought to rebuild its economy through economic integration schemes such as the EEC in 1957 and the European Free Trade Area (EFTA) in 1960. EEC and EFTA member states enjoyed preferential access to each other’s markets. The United States, on the other hand, watched as its exports to the European market dropped by $200 million per annum.

In response, Kennedy proposed the “Grand Design” in 1962. Kennedy’s initiative supported European integration with the hope of expanding U.S. exports in the European market. In his 1963 State of the Union speech, Kennedy said:

Far from resenting the new Europe, we regard her as a welcome partner, not a rival…The next most pressing concern of the alliance is our common economic goals of trade and growth…This Government means to use the authority conferred on it last year by the Congress to encourage trade expansion on both sides of the Atlantic and around the world.

Kennedy’s initiative had very limited success due to protectionist practices. It cut tariffs by 36-39% on $40 billion worth of world trade during the Kennedy Round (1964-1967) of General Agreement on Tariffs and Trade (GATT) negotiations. In 1962, the United States failed to follow through on its GATT concessions on carpet and glass. As a result, the EEC set up barriers against U.S. exports to its market. Furthermore, the EEC’s protectionist agricultural policy fueled trade tensions. Finally, as Featherstone and Ginsberg (1996) and Steffenson (2005) point out, strong opposition within the EEC presented a significant obstacle to Kennedy’s plan. France, in particular, expressed concern about an asymmetrical relationship with the United States rather than one of an equal partnership.

The Year of Europe (1973)

President Richard Nixon also sought to deepen economic cooperation between the United States and Europe in 1973, which he referred to as the Year of Europe. To fulfill this goal, Nixon proposed the New Atlantic Charter in the same year.

Much like the Grand Design before, Nixon’s initiative did not have much success due to competing economic interests between Europe and the United States and the global recession at the time. Furthermore, Featherstone and Ginsberg (1996) write that the failure of Nixon’s New Atlantic Charter resulted from the “condescending and hegemonic attitude of the US…along with [EEC] members’ unease with US leadership” (91).

Much like the previous decade, trade wars continued between Europe and the United States in the 1970s.

Conclusion

In sum, while initiatives were put in place to promote transatlantic trade in goods and services, they failed to have a huge impact due to protectionist practices on both sides and the lack of an institution to adequately enforce commitments between the United States and Europe.

Perhaps, the lessons of the past can assist with the upcoming trade talks between the United States and the EU. Current tensions surrounding protectionist agricultural trade policies, for example, will have to be resolved to move forward with a successful and effective agreement in the 21st century.

**Come back for Part 2 of the series: Trans-Atlantic Trade Institutions of the 1990s

Sources:

Kevin Featherstone and Roy H. Ginsberg. The United States and the European Union in the 1990s: Partners in Transition. New York: St. Martin’s Press, 1996.

Rebecca Steffenson. Managing EU-US Relations: Actors, Institutions and the New Transatlantic Agenda. New York: Manchester University Press, 2005.

Keep up with these discussions through a free subscription (see top right corner to follow), Facebook and twitter (@intltradexaminr). 

Protected by Copyscape Originality Checker

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License

 

About Dr. Sarita D. Jackson

is the President and CEO of the Global Research Institute of International Trade, a think-tank/consulting firm that examines trade policies and their impact on domestic businesses. Prior to heading GRIIT, Dr. Jackson was a tenured associate professor of political science in North Carolina and worked as a trade policy consultant for an Arlington-based consulting firm. She has participated in trade policy projects and conducted research on free trade negotiations in Botswana, Antigua and Barbuda, Dominica, Dominican Republic, Mexico and Panama. Dr. Jackson has also traveled to Chile and Argentina to study their political systems and economic integration policies.
This entry was posted in Cross-regional Free Trade Agreements, Free Trade Agreements, Free Trade Talks/Proposals, International Trade, Office of U.S. Trade Representatives, Political Players, White House and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge