"Reciprocal. That means: they do it to us and we do it to them. Very simple. Can't get any simpler than that." In his April 2 "Liberation Day" speech on trade, Donald Trump repeatedly called for a return to reciprocity. According to him, its absence explains the United States's chronic trade deficits.
Reciprocity is a concept with two meanings. In a positive context: an advantage for an advantage. In a negative one: an eye for an eye. Historically, reciprocity was used as a way to protect the American market. But after 1934, it became a tool for opening international markets. In the 1980s, the concept reemerged in protectionist vocabulary.
The word appears in numerous trade treaties, starting with the first American trade treaty signed with France in 1778. It is also established as a principle in the General Agreement on Tariffs and Trade (GATT) signed in 1947 and the treaty that created the World Trade Organization (WTO) in 1995. Its definition seems quite straightforward: "Reciprocity can be an effective strategy to induce cooperation among self-interested players," to quote political scientist Robert Keohane.
'Quack remedy'
But those in Washington today who have made reciprocity their creed are subscribing to a tradition hostile to free trade that dates back to the 19th century. In their mercantilist worldview, a trade deficit with another country is inevitably a defeat. Therefore, they believe that tariff and non-tariff barriers must be exactly equal with every trading partner. Instead of "free trade," there should be "fair trade."
In 19th-century England, the notion of reciprocity served as a banner for various protectionist groups, such as the Revivers of British Industry, the Reciprocity Free Trade Association and the National Fair Trade League. Free traders were not fooled. "There is a quack remedy which is called reciprocity, and this quack remedy is under the special protection of quack doctor," quipped Prime Minister William Gladstone (1809-1898) in a 1879 speech, particularly emphasizing the word "protection" to amuse his audience.
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