reciprocal trade agreement
reciprocal trade agreement, international commercial treaty in which two or more nations grant equally advantageous trade concessions to each other. It usually refers to treaties dealing with tariffs. For example, one nation may grant another a special schedule of tariff concessions in return for equivalent advantages. Originally reciprocity agreements involved bilateral tariff reductions that were not to be extended to third countries. In the 18th cent., England relaxed its Navigation Acts in return for similar action by other nations. In the 19th cent. the German Zollverein was based on reciprocity, and the system of reciprocity fostered by Napoleon III worked strongly in favor of free trade . After the downfall of the French Second Empire (1870), many European countries began to follow a policy of high tariffs. In the United States reciprocity was advocated as part of the tariff policy after 1880. The use of the most-favored-nation clause after 1922 resulted in a widespread exchange of tariff concessions; it was followed by the Trade Agreements Act (1934). Since 1948 the general policy of the United States has been to negotiate reciprocal tariff concessions within the framework originally established by the General Agreement on Tariffs and Trade (GATT). The Trade Expansion Act (1962) provided for negotiations, under GATT auspices, to expand reciprocal trade agreements, especially with the European Economic Community, or Common Market (now part of the European Union ). The act resulted in the Kennedy Round (1964–67) and the Tokyo Round (1974–79) of GATT talks, which produced reciprocal tariff reductions, mainly between the United States and W Europe, and new rules on customs and duties. GATT's Uruguay Round (1986–93) culminated in the creation (1995) of the World Trade Organization . Reciprocal agreements may also deal with such matters as rights of foreigners and consular relations.
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