Concept
Free trade
Overview
Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold economically liberal positions, while economic nationalist political parties generally support protectionism, the opposite of free trade.
Most nations are today members of the World Trade Organization multilateral trade agreements. States can unilaterally reduce regulations and duties on imports and exports, as well as form bilateral and multilateral free trade agreements. Free trade areas between groups of countries, such as the European Economic Area and the Mercosur open markets, establish a free trade zone among members while creating a protectionist barrier between that free trade area and the rest of the world. Most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes and non-tariff barriers, such as regulatory legislation.
Historically, openness to free trade substantially increased from 1815 to the outbreak of World War I. Trade openness increased again during the 1920s, but collapsed (in particular in Europe and North America) during the Great Depression. Trade openness increased substantially again from the 1950s onwards (albeit with a slowdown during the 1973 oil crisis). Economists and economic historians contend that current levels of trade openness are the highest they have ever been.
Economists are generally supportive of free trade. There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare while free trade and the reduction of trade barriers has a positive effect on economic growth and economic stability. However, in the short run, liberalization of trade can cause unequally distributed losses and the economic dislocation of workers in import-competing sectors.
Overview adapted from Wikipedia (CC BY-SA 4.0; see the article history for authors).
Possible passages
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The tobacco of Maryland and Virginia, for example, by means of the monopoly which England enjoys of it, certainly comes cheaper to England than it can do to France to whom England commonly sells a considerable part of it. But had France and all other European countries been at all times allowed a free trade to Maryland and Virginia, the tobacco of those colonies might by this time have come cheaper than it actually…
Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations
Names Free trade several times; the author is tied to Free trade in the knowledge graph.
A. L. Perry’s “Political Economy” gives a radical free-trade view. Henry Fawcett’s “Free Trade and Protection” explains the causes which have retarded the more general adoption of free trade. J. E. Cairnes’s “Leading Principles of Political Economy” gives the ablest discussion of the economic principles involved in the question which has yet been offered to the reader. Moreover, almost all our systematic writers on…
John Stuart Mill, Principles of Political Economy
Names Free trade several times; the author is tied to Free trade in the knowledge graph.
These commodities having been enumerated in the act of navigation, and in some other subsequent acts, have upon that account been called _enumerated commodities_. The rest are called _non-enumerated_, and may be exported directly to other countries, provided it is in British or plantation ships, of which the owners and three fourths of the mariners are British subjects.
Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations
States what Free trade is; the author is tied to Free trade in the knowledge graph.
Philosophers who discussed Free trade
Related ideas
- Francisco de Vitoria
- Princeton University Press
- Springer Science+Business Media
- Ireland
- Isolationism
- Imperialism
- John Stuart Mill
- Bengal Presidency
- Karl Marx
- Capital (economics)
- Adam Smith
- Environmentalism
- Labour Party (UK)
- Great Depression
- New Deal
- University of Chicago Press
- Mercantilism
- American Revolution
- Populism
- Ottoman Empire
- Prime Minister of the United Kingdom
- Qing dynasty
- Roman Empire
- Socialism
Opposing perspectives
- Conservative Party (UK)
- Whigs (British political party)
- David Ricardo
- Adam Müller
- History of political thought
Place in the tradition
Part of British philosophy.