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Trade Act of 1974: What It is, How It Works, Example

What Is Trade Act of 1974?

The Trade Act of 1974 is a piece of legislation passed by the U.S. Congress to expand American participation in international trade and reduce trade disputes. The enactment of the law happened on Jan. 3, 1975. The act provided the authority to reduce or eliminate trade barriers and to improve relationships with non-market Communist countries and countries with developing economies. Further, the act hoped to bring change to injurious and unfair competition laws.

Key Takeaways

  • The Trade Act of 1974 is legislation passed by Congress to expand U.S. participation in international trade and reduce trade disputes.
  • The act gave relief to American industries negatively affected by increased international trade, and placed tariffs on imports from developing countries.
  • It has opened up foreign markets to U.S. exports.
  • It created a fast-track authority for the president to negotiate trade agreements, which Congress may approve or disapprove but cannot amend or filibuster.

Understanding the Trade Act of 1974

The act provided relief for American industries negatively affected by increased international trade and placed tariffs on imports from developing countries. It also provided for U.S. action against foreign countries whose import activities unfairly disadvantaged American labor and industry.

In retrospect, the Trade Act of 1974 and its subsequent iterations have been used more to open foreign markets to U.S. exports and investments than to protect American industries from unfair outside competition.

International trade has long been a contentious political and economic issue. Opponents argue it takes jobs away from domestic workers. Proponents counter that, while international trade may force domestic workers to move into other lines of work, free trade takes full advantage of specialization and division of labor to improve economic conditions in all participating countries.

free trade agreements

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Japan should work with the bloc to preserve the free trade system.

German Chancellor Pledges Progress on EU-Indonesia FTAGerman Chancellor Pledges Progress on EU-Indonesia FTABy Sebastian Strangio

Olaf Scholz said that the domestic processing of vital minerals, a key goal of the Indonesian government, be included under any future trade pact.

Vietnam, Israel Conclude Negotiations for Free Trade PactVietnam, Israel Conclude Negotiations for Free Trade PactBy Sebastian Strangio

The agreement, which will be signed later this year, coincides with the 30th anniversary of relations between the two countries.

Thailand, EU Agree to Restart Free Trade Pact NegotiationsThailand, EU Agree to Restart Free Trade Pact NegotiationsBy Sebastian Strangio

Brussels called a halt negotiations in mid-2014, shortly after the Thai military seized power in a coup.

Can the EU and Indonesia Sign Their Elusive Free Trade Agreement?Can the EU and Indonesia Sign Their Elusive Free Trade Agreement?By William Yuen Yee

There is a tension between Brussels’ environmental concerns and its desire to boost its commercial engagement with the Asia-Pacific.

Trade Troubles: Do We Still Need the WTO?Trade Troubles: Do We Still Need the WTO?By Ryan Burke

The WTO injects more tension than trust into the international system.

RCEP Edges Closer to Ratification in an Indonesia Battered by COVID-19

trade agreement

The White House rolled out all the flourishes of a state visit for South Korean President Lee to celebrate the new trade agreement, passed by Congress on Wednesday, and to discuss a strategy to denuclearize North Korea. Margret Warner reports.

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