Reciprocity (in trade)

Extracted Attributes

• Core Principle

  The granting of mutual concessions in tariff rates, quotas, or other commercial restrictions between states.

• Modern Application

  Used as a justification for the proposed U.S. TikTok ban and ByteDance divestiture bill.

• Types of Reciprocity

  Specific vs. Diffuse, Open vs. Restrictive, and Passive vs. Aggressive.

• Economic Classification

  Often regarded as a political or mercantilist view rather than one rooted in orthodox economics.

Timeline

• The United States signs the Treaty of Amity and Commerce with France, one of the earliest instances of incorporating reciprocal trade concessions. (Source: IDE-JETRO)

  1778-02-06

• Great Britain legislates the Reciprocity of Duties Act, entering into bilateral treaties for conditional MFN treatment. (Source: IDE-JETRO)

  1823-01-01

• U.S. Congress passes the Reciprocal Trade Agreements Act (RTAA), empowering the President to negotiate mutual tariff reductions. (Source: Council on Foreign Relations)

  1934-06-12

• The World Trade Organization is established, requiring member governments to enter into reciprocal and mutually advantageous arrangements. (Source: ScienceDirect)

  1995-01-01

• Palmer Luckey cites the principle of trade reciprocity as a primary justification for the bipartisan bill to force ByteDance to divest TikTok. (Source: All-In Podcast Episode 169)

  2024-03-01

Trade

Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. Traders generally negotiate through a medium of credit or exchange, such as money. Though some economists characterize barter (i.e. trading things without the use of money) as an early form of trade, money was invented before written history began. Letters of credit, paper money, and non-physical money have greatly simplified and promoted trade as buying can be separated from selling, or earning. Trade between two traders is called bilateral trade, while trade involving more than two traders is called multilateral trade. In one modern view, trade exists due to specialization and the division of labor, a predominant form of economic activity in which individuals and groups concentrate on a small aspect of production, but use their output in trade for other products and needs. Trade exists between regions because different regions may have a comparative advantage (perceived or real) in the production of some trade-able goods – including the production of scarce or limited natural resources elsewhere. For example, different regions' sizes may encourage mass production. In such circumstances, trading at market price between locations can benefit both locations. Different types of traders may specialize in trading different kinds of goods; for example, the spice trade and grain trade have both historically been important in the development of a global, international economy. Retail trade consists of the sale of goods or merchandise from a fixed location, online or by mail, in small or individual lots for direct consumption or use by the purchaser. Wholesale trade is the traffic in goods that are sold as merchandise to retailers, industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. Historically, openness to free trade substantially increased in some areas from 1815 until the outbreak of World War I in 1914. Trade openness increased again during the 1920s but collapsed (in particular in Europe and North America) during the Great Depression of the 1930s. Trade openness increased substantially again from the 1950s onward (albeit with a slowdown during the oil crisis of the 1970s). Economists and economic historians contend that current levels of trade openness are the highest they have ever been.

Web Search Results

• Reciprocity | Free Trade, Tariffs & Quotas | Britannica Money

  reciprocity, in international trade, the granting of mutual concessions in tariff rates, quotas, or other commercial restrictions. Reciprocity implies that these concessions are neither intended nor expected to be generalized to other countries with which the contracting parties have commercial treaties. Reciprocity agreements may be made between individual countries or groups of countries. [...] The logical extension of reciprocity is the development of a full customs union (e.g., the European Union) that eliminates by progressive mutual concessions all tariffs and other restrictions between participating countries.

• Individual characteristics and the demand for reciprocity in ...

  Reciprocity has a critical influence, especially on international trade, where market failures are significant due to the absence of a common government.4 Reciprocity in international trade implies that a country adjusts its trade barriers, typically tariff rates, on imports in exchange for foreign trade barriers on the country’s exports.5 In the agreement establishing the World Trade Organization (WTO), the member governments state that they enter into “reciprocal and mutually advantageous [...] The principle of reciprocity refers to the balance of “concessions.” From a mercantilist viewpoint, trade negotiators regard import liberalization as “concessions.” Improved market access arguments presented in public news on trade negotiations are analogous to the principle of reciprocity. Hence, in international trade, the reciprocity argument has long been regarded as a political or mercantilist view, not one rooted in orthodox economics. Bagwell and Staiger (1999), however, formalize [...] Reciprocity is an important concept in international trade negotiations. However, we know little about who demands reciprocity in trade liberalization. This paper characterizes reciprocitarians based on a survey of 10,816 individuals in Japan. Workers in protected sectors tend to demand reciprocity in import liberalization, but oppose the demand for foreign countries to open their markets. In contrast, individuals in managerial occupations tend to demand foreign market opening, but reject the

• Reciprocity in Trade Liberalization

  and consular staffs. After the mid-eighteenth century, reciprocity became the fundamental principle in international trade. It was the United States who brought reciprocity into trade policy. After gaining independence, the United States signed the Treaty of Amity and Commerce with France in 1778, which contained provisions for reciprocal trade concessions in order to secure free flow of goods and ships (Ishikawa, 1985: 11). In the Preamble of the treaty, emphasis was placed on the significance [...] reciprocally. The United States had concluded bilateral commercial agreements based on reciprocity with most of the Latin American countries by around 1830 as well. The principle of reciprocity in the trade policy of the United States was gradually accepted among the European states. Great Britain, for instance, legislated the Reciprocity of Duties Act in 1823, under which it entered into bilateral treaties to provide conditional MFN treatment for both countries’ exports. In addition, Britain [...] require the balance of participants (Kuwahara, 1975: 416). Reciprocity is roughly categorized into two types. According to Smith, there are open reciprocity and restrictive reciprocity (Ishikawa, 1985: 10-11); Cline (1983) called them passive reciprocity and aggressive reciprocity; and Keohane (1986) termed them diffuse reciprocity and specific reciprocity. The notion of the former implies a broad extent and a long-term relationship. Open, passive and diffuse reciprocity does not demand any

• Donald Trump Wants Reciprocity in Trade: Here's a Closer Look

  Reciprocity has been the foundation of U.S. participation in global trade negotiations since the 1930s. In 1934—chastised in part by the disaster of the 1930 Smoot-Hawley tariff increases, when other countries raised their own tariffs to retaliate against the United States—Congress empowered President Franklin D. Roosevelt to negotiate “reciprocal” tariff reductions with other countries. The 1934 Reciprocal Trade Agreements Act (RTAA) led to the negotiation of nearly two dozen agreements over [...] Reciprocity and the MFN principle turned out to be world-changing ideas that over the following decades persuaded most countries to lower tariffs and participate fully in global trade. In the United States, as trade economist Richard Baldwin has argued, the idea of reciprocity turned the politics of trade on its head. U.S. companies that were competitive in global markets—and after World War II, the United States was the most competitive manufacturing economy in the world—recognized they could [...] Reciprocity, to be clear, is a powerful idea. The American people would never have supported the gradual removal of tariffs and other barriers to freer trade without a belief that other countries were doing the same. The growing sense that others—especially big developing nations such as China and India—are not making similar commitments has certainly weakened U.S. public support for the global trading system. In the best possible outcome, Trump’s reciprocity initiative could open the door to

• Reciprocity (international relations) - Wikipedia

  Reciprocity being the foundation for many bonds of trust between people can be applied in various ways and within various topics. When thinking of reciprocity in relation to international relations, it is clear to see that exchanges play a big role. An example of international relations reciprocity would be trade agreements. Trade agreements make it easier for countries to trade with one another as even big and small countries can end up trading with one another, leading to it benefitting both [...] Several theorists have drawn a distinction between "specific reciprocity" and "diffuse reciprocity". While specific reciprocity is exemplified by international trade negotiations, as suggested above, diffuse reciprocity points to a wider institutionalisation of trust "Trust (sociology)"). Through consistent cooperation in an international society, states are seen as building generally accepted standards of behaviour. These general standards exert their own normative "Norm (sociology)") pressure [...] Wikipedia The Free Encyclopedia ## Contents # Reciprocity (international relations) In international relations and treaties, the principle of reciprocity states that favors, benefits, or penalties that are granted by one state to the citizens or legal entities of another, should be returned in kind.