John Nye: prediction

Transcript context

…As you know, in today’s America, there’s a major debate between bilateral and multilateral approaches to free trade, and most intellectuals, maybe without even thinking about it very much — they tend to think the multilateral approach is necessarily better. What is it you think we learn from the 19th century experience? In fact, one of the things I do know about the 19th century is that there’s no evidence that either unilateral free trade or multilateral did very much. Almost all the free trade in Europe in the 19th century was a product of, initially, the bilateral trade agreement between Britain and France, sometimes known as the Anglo-French Treaty of Commerce of 1860, in which they each agreed to much more liberalized trade on a most-favored-nation basis. Once they accepted this, then what happened is, anyone who signed on to either Britain or France on the most-favored-nation basis then bought into, in some sense, this system. What’s interesting is that after the Corn Laws, Britain is telling everybody to unilaterally lower their tariffs because free trade’s so good. And the French and the Spanish are screaming, “What about your wine tariffs?” But then in 1860 they negotiate this secret treaty between England and France, or Britain and France. Again, I have to keep repeating, even though it’s called Anglo-French Treaty. Suddenly, pretty much every power in Europe joins in. Within the decade, virtually all the major powers in Europe are locked into a free trade agreement with Britain and France because they’re afraid of being left out because the two major powers in the continent have negotiated this treaty. In fact, the only Western power who sees their tariffs rise is the United States, thanks to the Civil War. Is there a bilateral approach to trade agreements that, today, could give us freer trade than multilateralism?…

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