Trade Act of 1974?
A statute enacted by the 93rd United States Congress to increase the United States of America’s international trade and reduce trade conflicts.
Trade Act of 1974 Details
On January 5, 1975, under the administration of the 38th President of the United States of America, Gerald Ford, Congress enacted the Trade Act of 1974 to help improve international trade fairness and boost the United States of America’s presence in international trade.
The economy is a country’s lifeblood and international trade is the best way to boost an economy. But when international trade is interrupted, the whole country suffers. International trade in the early 19th century was absolutely brutal. Countries were trying to outmaneuver their rivals by handing out trade embargoes and reaping as much profit as they could. As time passed, countries all around the world realized that aggressive trading policies do more harm than good and gathered together to make a new law that would limit the injustice.
The 1974 Trade Act does its job by giving the president more power to quickly and easily intervene in international trade contracts. The Trade Act also appointed the International Trade Commission (ITC) to investigate reports filed by domestic industries regarding financial abuse that could endanger the USA’s economy.
Titles of the Trade Act
The Trade Act of 1974 consists of 6 titles, which include the following:
1. Negotiating and Other Authority — lists the basic properties of negotiating techniques
2. Relief From Injury Caused by Import Competition — declares how to recover from losing import competition by properly managing workers, asking for financial investigation from the ITC, and requesting assistance from domestic firms or the government.
3. Relief From Unfair Trade Practices — describes how to recover from unfair trade practices by responding properly to foreign trade practices, amendments of the 1921 Anti-dumping Act, and amendments to the 1930 Tariff Act.
4. Trade Relations With Countries Not Currently Receiving Nondiscriminatory Treatment — states regulations regarding trading practices with neutral and friendly countries mainly located in the East.
5. Generalized System of Preferences — contains a general guideline on international trading practices with all countries.
6. General Provisions — includes definitions of frequent words, relation to other laws, and import-export data handling.
Real World Example of 1974 Trade Act
China and America are two of the most powerful countries on earth that have been fiercely competing against each other for the past decade. America noticed bizarre figures coming from China’s growth statistics. Its leaders suspected the Chinese government of unfair trade practices, including giving free land to domestic Chinese corporations, blatantly copying technology from America, and maintaining non-standard employee regulations such as underage workers. As a result, America’s 45th President, Donald Trump Jr. invoked the Trade Act of 1974 under section 301 (which states “Responses to certain trade practices of foreign governments”) to launch an investigation towards China’s allegedly unfair trade practices. Robert Emmet Lightizer, the United States of America’s Trade Representative under Donald Trump’s administration, lead the investigation against China’s trade practices.
Not long after, China and America engaged in a fierce trade war. America doubled the tariffs (tax for international trade) on Chinese exported goods from 3% to 6% in July 2018. China responded instantly by upping its tariffs on America exported goods from 7% to 11%. China especially targeted America’s soybean export tariffs, since it’s America’s biggest export commodity, and most soybean farmers grow their crops to export them to China. The trade war between America and China became more intense, resulting in tariffs for China's goods peaking at 21%, while tariffs for American goods peaked at 21.8%.
This policy produced a significant effect on the low-mid class citizens of America, who were suffering from the increased prices on everyday products. Those prices mercilessly climbed since most of the consumer goods in America are imported from China. Americans had to spend more money to meet their needs, while their salary remained the same. This phenomenon stunts America's economic growth. In February 2020, both countries agreed to a trade war ceasefire by lowering their tariffs in phases.
History of 1974 Trade Act
The China vs. America trade war serves as an example of how the United States of America uses the 1974 Trade Act to protect its economy. But now, let’s take a look at the event that motivated the congressmen to create the 1974 Trade Act. The chicken tariff war in the 1960s was a trade war between America, France, Germany, and Japan.
America’s lands are full of great plains and pastures, suitable for crop farming and animal husbandry. America’s chicken farming industry rose due to the recent surge in technology that enabled farmers to mass-produce chicken eggs and meat. Countries in Europe had difficulty raising enough food because of the World War II devastation. Most countries in Europe and Asia bought cheap American poultry in great quantities. However, France and Germany noticed America’s sudden growth and wanted to capitalize on it. So, they both imposed a harsh tariff on chicken imported from America.
The U.S. replied to the act by imposing a hefty 25% tariff on light trucks (which was primarily aimed at German Volkswagen vehicles), French brandy, and potato starch. Japan was also hit hard by this tariff, since they rely a lot on their auto industry with leading brands like Toyota, Isuzu, and Suzuki. In the end, this great suffering serves as an important lesson and the main reason for the Trade Act of 1974's creation.