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How The Idea Of Free Trade As A Way To World Peace Gained Traction

Oct 7, 2016
Originally published on October 7, 2016 9:27 am
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DAVID GREENE, HOST:

Hillary Clinton and Donald Trump do not agree on much. But they do seem to agree on one thing.

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DONALD TRUMP: TPP, the trade deal, Trans-Pacific Partnership, a horrible deal for our country.

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HILLARY CLINTON: I oppose it now. I'll oppose it after the election, and I'll oppose it as president.

GREENE: Now a proposed trade deal might seem like an easy target for political candidates, but it hasn't always been this way. Jacob Goldstein from our Planet Money podcast has the story of a powerful politician and Nobel laureate who believed free trade was the way to world peace.

JACOB GOLDSTEIN, BYLINE: As much as any single person, Cordell Hull helped create the free trade world we live in today. But you don't hear much about him anymore. Michael Butler wrote a book about Hull.

MICHAEL A. BUTLER: Cordell Hull was one of the most important forgotten men of the 20th century.

GOLDSTEIN: According to Butler, Hull had his big revelation about peace and free trade during World War I. He was a U.S. congressman from Tennessee. And at the time, he thought Germany and France wouldn't have needed to fight in the trenches if they'd traded more stuff with each other, if there were thousands of businessmen in Paris and Berlin saying to their governments - hey, don't shoot my customers.

Hull became secretary of state under Franklin Roosevelt. But with the Great Depression and the rise of fascism, the 1930s just were not a good time to be an internationalist pushing free trade.

DOUG IRWIN: People thought he was nuts.

GOLDSTEIN: This is Doug Irwin, an economic historian.

IRWIN: The reason why there's Nazi Germany is because they didn't trade enough, because they didn't have free trade? People said, that's just not it. He's off base.

GOLDSTEIN: What finally changed things for Hull was World War II. As the U.S. started thinking about how to rebuild the world after the war, Hull's message suddenly started to make more sense. Here's Doug Irwin making Hull's case.

IRWIN: If people are trading with one another, they'll have a vested stake in preserving peace. If there's economic rivalry and bitterness and resentment about other countries stealing our jobs, it's going to lead to a political breakdown and lead, potentially, to another war. And the president strongly supported all of this, and that was his moment.

GOLDSTEIN: The push for free trade had something else going for it in the U.S. at the time, naked commercial self-interest. U.S. companies and unions looked at the world and saw that their foreign competition had been bombed to dust during the war.

IRWIN: Western Europe's devastated. Japan's devastated. And they need our products. And we need to create jobs for our veterans coming home, so this is a win-win for us.

GOLDSTEIN: So the companies and unions went to Congress and said, let's lower tariffs all over the world. And it happened. After the war, Hull's free trade dream came true. The U.S. and more than 20 other countries created GATT, the General Agreement on Tariffs and Trade. And GATT was like this international machine for lowering tariffs. At the end of the war, the average tariff on imports to the U.S. was around 30 percent. Today, it's roughly 5 percent. Hull won the Nobel Peace Prize in 1945, partly for his work on the United Nations but also for his idea that trade barriers are, quote, "barriers also to lasting peace."

Jacob Goldstein, NPR News. Transcript provided by NPR, Copyright NPR.