H.W. Arndt's argument that reciprocity clauses in tariff reductions should be abolished is founded on the assumption that perfect competitive and frictionless markets exist. In actuality, however, inefficiencies in real market economies are inevitable and this makes reciprocity clauses necessary. Under conditions of Keynesian underemployment and given the absence of international agreements for maintaining employment, reciprocity clauses become important.

JEL Codes: F10