Free trade

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Free trade is an economic practice in which two or more countries agree to enforce few or no barriers to trade, such as quotas or tariffs, upon the exchange of goods and services between the countries. The concept is central to classical liberalism, especially international classical liberalism, whose proponents believe that free trade naturally leads to free cultural exchange and the free exchange of ideas for the populations involved. For many modern international relations-minded classical liberals, free trade also promotes peace because it intensifies interdependence in addition to cultural exchange. For this reason and others, free trade forms a significant portion of the backbone of the European Union and European cooperation institutions more broadly.

Opposition to free trade can come from many different political stances. Economic nationalists and mercantilists dislike free trade because they see it as threatening to national sovereignty. International relations realists and neo-mercantilists dislike it because they see it as an obstacle to national security. Reactionaries dislike it because they fear the possibility of cultural exchange and/or increased immigration. Some conservatives dislike it if it increases their country's net capital outflow. Some progressives dislike it because they see it as harmful to the domestic economy and/or the environment. Leftists dislike it because they see it as advantageous, both in terms of economics and power, to the elites and disadvantageous to everyone else; they prefer working/middle class internationalism to capitalist internationalism. And, of course, each of these groups may share the concerns presented by the other groups.

[edit] What free trade is not

"Free trade" is often used as a guise for two or more countries' governments to impose really bad economic, social, and environmental policy upon their respective populations through treaties having nothing to do with actual free trade. The most obvious example of this in North America is NAFTA. Present threats of this nature, which all happen to be more global in scope, include the Trans-Pacific Partnership[1][2][3][4][5], the Transatlantic Trade and Investment Partnership[6][7], and the Trade in Services Agreement[8], all of which are currently being negotiated in secret, including their content. In fact, the negotiation texts for TISA (although not the final outcome) are not supposed to be released until five years after all parties have ratified it according to a Wikileaks release.

Free trade is not always Pareto-optimal. Thus, free trade should not be confused with fair trade, which could be argued as being a subset of free trade and which can be basically defined as international trade that is at the very least not detrimental to all stakeholders involved at every stage of the trading process - the definition of Pareto efficiency. Generally, some compensation or transfer has to be orchestrated to make whole the losers of a trade agreement.

The failure of the current US and other global governments in either understanding the difference between free trade and fair trade or in being indifferent towards losers of free trade agreements and unions has led to the rise, rightly or wrongly - or maybe some rightly some wrongly, of political figures like Donald Trump, Bernie Sanders, Boris Johnson, Nigel Farage, and Marine Le Pen.

[edit] See also

[edit] References

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