“We need markets—big markets—around the world in which to buy and sell.” William L. Clayton was a free trade champion. In 1946, Clayton became the Under Secretary of State for Economic Affairs. Will helped pave the way for the General Agreement on Tariffs and Trade (1947) and the Marshall Plan (1948). He was also the man behind the International Trade Organization (1948) that the U.S. Senate refused the ratify—which effectively killed it.
Clayton also believed that free trade should be governed by federal union of the free. In 1949, he helped Clarence K. Streit, author of Union Now (1939), establish the Atlantic Union Committee. Its stated purpose can be summed up in its founding resolution:
Resolved that the action committee be formed for the purpose of (a) enlisting public support for a resolution to be introduced in Congress inviting other democracies with whom the U.S. is contemplating an alliance, to meet with American delegates in a federal convention to explore the possibilities of uniting them in Federal Union of the Free, and (b) continuing this support until such a Federal Union of Democracies becomes an accomplished fact.
Clayton and the Atlantic Union Committee worked tirelessly with Senator Estes Kefauver to inspire the Atlantic Convention of 1962. From 1949 to 1960, members of the AUC lobbied members of Congress and State Department officials to support the idea of transforming the North Atlantic Treaty Organization (NATO) into a more perfect union modeled after the United States Constitution. They captured the hearts and minds of many men at high-levels like Secretary of State Christian A. Herter, Vice President Richard M. Nixon and President Dwight D. Eisenhower.
Up until 1959, standing in the way of the Atlantic Union Committee was the U.S. State Department. Their focus was placed on encouraging European economic integration as a stepping stone to a transatlantic partnership. State viewed Atlantic Union as impractical as Europeans feared such a union would be dominated by the United States.
With the help of Jean Monnet and Robert Schumann, European integration took hold. The American established grew concerned that a united Europe could succumb to nationalistic tendencies—just as the United States had done. Even worse, the feared that it could potentially look East rather than West. Europeans are collectivists after all.
When the European Common Market formed in 1957, the idea of convening an Atlantic Convention was viewed as an attractive way to explore Atlantic unity and resolve without disrupting foreign policy. After John Foster Dulles resigned, President Eisenhower appointed Representative Christian Herter as Secretary of State. Secretary Herter removed State’s objection to the Atlantic Convention.
In 1960, the AUC compromised and accepted a watered down version of the Atlantic Union Resolution that was politically expedient. It was renamed U.S. Citizens Commission on NATO. It called for an Atlantic Convention, but softened its political aim to Atlantic cooperation rather than federal union. Cleared by the Eisenhower administration, Congress passed the bill and it became public law.
U.S. P.L. 86-719: To authorize the participation in an international convention of representative citizens from the North Atlantic Treaty nations to examine how greater political and economic cooperation among their peoples may be promoted, to provide for the appointment of United States delegates to such convention, and for other purposes.
It was up to the Democratic Party establishment to select the U.S. delegation. Kennedy defeated Nixon and the Democrats controlled Congress. In bipartisan form, they selected Atlantic Union pioneer, William Clayton (D), and Christian Herter (R), to serve as chairman of the U.S. Citizens Commission on NATO. It was stacked with friends of the AUC.
In preparation for the Kennedy Round of GATT negotiations, Clayton and Herter made the case for unfettered free trade. In 1961, they petitioned Congress to take “A New Look at Foreign Economic Policy.” They called on the United States to forge an expansionist free trade area with the European Common Market while significantly reducing barriers to trade with contested nations to halt the spread of communism. They argued:
Without restrictive tariffs or other impediments to the movement of goods across national frontiers, production would be rationalized on the basis of comparative advantage, just as it has been the 50 States of the U.S.A.
Under such conditions there would, in our opinion, take place the greatest expansion in production facilities, including those in the United States, that the world has ever known. The facilities would be located in the most advantageous areas, based on labor, skills, climate, availability of raw materials, transportation, and markets. Most of them would be built by private capital. Many would be built in the contested countries because favorable operating conditions and because, no matter where located, the whole trading area with its 2 billion people would be a potential market, without barriers.
In this way, sound development of the contested countries would take place. Their standards of living would rise. The economic gap between the richer and the poorer would be narrowed. Communism as a threat to world peace would recede.
Leading the U.S. delegation at the Atlantic Convention of 1962, Clayton and Herter helped draft the Declaration of Paris. It called for the establishment of a true Atlantic community with supranational characteristics. While it fell short of federalist aspirations, it welcomed-
the development, progress and prospective expansion of the European economic institutions, and the spirit of President Kennedy’s statement that a trade partnership be formed between the United States and the European Economic Community, the basis of an Atlantic Economic Community, open to other nations of the free world.
On July 4th, 1962, President Kennedy embraced the vision of the Declaration of Paris as a distant concept and goal—
But I will say here and now, on this Day of Independence, that the United States will be ready for a Declaration of Interdependence, that we will be prepared to discuss with a united Europe the ways and means of forming a concrete Atlantic partnership, a mutually beneficial partnership between the new union now emerging in Europe and the old American Union founded here 175 year ago . . . For the Atlantic partnership of which I speak would not look inward only, preoccupied with its own welfare and advancement. It must look outward to cooperate with all nations in meeting their common concern. It would serve as a nucleus for the eventual union of all free men – those who are now free and those who are vowing that someday they will be free.
The Atlantic Union Movement was temporarily derailed after the death of President Kennedy and the efforts of Charles de Gaulle to exert French leadership in Europe. Multinational corporations rejoiced, however, after the Kennedy Round of the GATT negotiations (1964-1967) slashed tariff and non-tariff barriers to trade. Implementation of the Declaration of Paris was overshadowed by the escalation of a French-born, civil war in Vietnam. The political will, on both sides of the Atlantic, was absent.
After Senator Kefauver passed away in 1963, Representative Paul Findley kept the Atlantic Union idea alive in Congress. Findley resurrected the Atlantic Union idea with its federalist emphasis in the late 1960s. Emerging leaders, such as Representatives Donald Rumsfeld and George H.W. Bush, joined the cause for Atlantic federal union. They knew the international economic order was broken. Currency manipulation and economic stagnation ruled the day.
Over 100 members of Congress joined the Atlantic Union crusade in the early to mid-1970s. Their solution to the problems of deficit spending and world trade were captured in the preamble of the Atlantic Union Resolution—
Whereas a more perfect union of the Atlantic community consistent with the United Nations gives promise of strengthening common defenses, while cutting its costs, providing a stable currency for world trade, facilitating commerce of all kinds, enhancing the welfare of the people of the member nations, and increasing their capacity to aid the people of developing nations
Big names like Tip O’Neil, James Wright, Jr., Gerald Ford and Walter Mondale supported the Atlantic Union idea. With President Nixon’s support, the time appeared right to call a second Atlantic Convention to transform NATO into an Atlantic federation. Their efforts were dashed in 1973 by the nationalist wing of the Republican Party.
Once again, simple free traders rejoiced when the President was granted so-called “fast track” trade authority in 1974. A new era of managed trade was born that would eventually sidestep legitimate constitutional accountability. It was a legislative coup at the behest of multilateral corporations. They would eventually usher in a new world order resembling George Orwell’s Animal Farm where they were more equal than others.
President Reagan initially facilitated this era where the national interest, defined as interests benefiting multinational corporations, became the bedrock of U.S. foreign and economic policy. Reagan was a member of the nationalistic wing of the Republican Party that forced internationalists underground. The dearth of federalist thought allowed the new establishment the power to exploit the nation-state system.
Nixonian progressivism and economic capitulation with China opened the door for MNCs to liberate themselves from the shackles of their respective nation-states. The establishment of the Environmental Protection Agency (EPA) and the Occupational Health and Safety Administration (OSHA) increased the cost of labor and production in the United States. The elimination of the gold standard fueled monetary instability. Trade with Pacific Rim countries added insult the injury.
During the Reagan years, MNCs were forced to adapt or die. Globalization was born. MNCs were now free to shape the rules of the international economic order, regardless of their impact on the developing world. Question the free trade doctrine and you were finished with extreme prejudice.
While free trade helped us win the Cold War, Clayton and Herter would likely argue that the cost of containment was too high. Today, managed trade no longer reflects the concept of comparative advantage as articulated in 1961. Under the new world order, lack of progressive labor and environmental standards represent the new comparative advantage. Multinationals depend on it. They exploit it.
The consequences of globalization without representation are obscene concentration of power and wealth as well as perpetual war. The Atlantic Union Movement unintentionally served as the incubator for the neoconservative thought that inspired the war in Iraq. Freedom, democracy and free markets are now advanced by force rather than consent.
In hindsight, Clarence K. Streit was right. Free trade without federal union is a recipe for disaster. Americans would never allow California to ignore the federal labor and environmental laws all 50 states are forced to abide by. Free trade is far more than just an absence of barriers to trade.
Today, managed trade regimes such as NAFTA and the WTO perpetuate regulatory inequality throughout the world. American and foreign establishments depend on it. They actively seek to solidify their gains with the Transatlantic Trade and Investment Act and the Trans-Pacific Partnership (Obamatrade). These trade regimes must be stopped. A new economic order that respects the sovereignty of every citizen participating in it must be established.
Who will lead us out of this global nightmare? Trump, Cruz and Sanders represent the opposition to managed trade regimes. Neither of them offer any real solutions to the problem. It is rooted in the nature of the nation-state system. It is fueled by the Federal Reserve, the defunct Bretton Woods system and myriad of free trade regimes forged by special interest groups.
Trump and Cruz promise to negotiate better trade deals for whose actual benefit we don’t actually know. Trump promises to apply tariffs to protect our national markets. Sanders promises that he will apply tariffs to promote labor and environmental standards abroad. Nobody is bold enough to admit that the best solution exists beyond national politics.
Only the citizens of the world can establish a world trading system that is fair for free people. We must all find the courage to explore and eventual forge a world social contract governing the international economic order. Such a contract should be legally expressed in the form of a constitution designed to decentralize economic power, encourage competition and establish fair and equitable rules that benefit all stakeholders—not simply the ruling elite.
Our common quest must build upon the counsel of President George Washington who stated in his farewell address—
Harmony, liberal intercourse with all nations, are recommended by policy, humanity, and interest. But even our commercial policy should hold an equal and impartial hand; neither seeking nor granting exclusive favors or preferences; consulting the natural course of things; diffusing and diversifying by gentle means the streams of commerce, but forcing nothing; establishing (with powers so disposed, in order to give trade a stable course, to define the rights of our merchants, and to enable the government to support them) conventional rules of intercourse, the best that present circumstances and mutual opinion will permit, but temporary, and liable to be from time to time abandoned or varied, as experience and circumstances shall dictate; constantly keeping in view that it is folly in one nation to look for disinterested favors from another; that it must pay with a portion of its independence for whatever it may accept under that character; that, by such acceptance, it may place itself in the condition of having given equivalents for nominal favors, and yet of being reproached with ingratitude for not giving more. There can be no greater error than to expect or calculate upon real favors from nation to nation. It is an illusion, which experience must cure, which a just pride ought to discard.
It is time for the sovereign citizen to emerge as the basic unit of world commerce. Harmony, liberal intercourse between all citizens of the world, should be recognized by policy, humanity, and interest. Statism undermines our natural, economic rights.
At a minimum, we need a sound international currency that governments cannot manipulate. We need to meet in the middle and harmonize labor and environmental regulations on a global scale. Most importantly, we need to restore our individual sovereignty and end globalization without representation.
We must not simply regurgitate past federalist proposals, such as the Atlantic Union idea. These doctrines were advanced during a time when the nation-state was paramount. While the nation-state is not dead, we need to transcend it n certain areas.
Using federalist principles we can selectively delegate power in a manner that unites only our sound economic aspirations. We can replace the IMF/World Bank, WTO and other regimes with a sound world currency (gold standard), harmonized labor and environmental standards, and simple, conventional rules of world commerce.
No more import/export bullshit. No more exchange rate follies. Just world commerce with governments enforcing rules rather than picking winners and losers.
In closing I call on Donald Trump to use his great negotiating skills to forge a world trading system that will eventually protect the sovereignty and economic liberty of every citizen of the world. Every American loves to win. More importantly, we love to play by the rules and win honorably.
Freedomists on the political right and left must meet in the middle to beat Hillary Clinton and her brand of crony capitalism.