Why Free Trade Matters

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Free trade means unrestricted movement of goods between countries. It refers to a condition of international trade when all kinds of artificial controls such as tariffs, quotas, etc. are absent. Free trade eradicates the distinction between domestic trade and international trade. Free trade policy is also known as the laissez- faire policy, i.e., the policy of government non-interference in foreign trade. Under such a policy, all barriers to the international movement of goods are removed and the trade between the countries is allowed to take its natural course. Penguin Dictionary defines free trade as the condition in which the free flow of goods and services in international exchange is neither restricted nor encouraged by direct government intervention. Adam Smith and Jagdish Bhagwati, two of arguably the most popular and most influential people in the field of economics, both gave a definition of free trade. According to Smith, free trade is that system of commercial policy which draws no distinction between domestic and foreign commodities and, therefore, neither imposes additional burdens on the latter, nor grants any special favors to the former. According to Jagdish Bhagwati, free trade policy involves complete absence of tariffs, quotas, exchange restrictions, taxes and subsidies on production, factor use and consumption. Based on these definitions, we can simply say that free trade connotes freedom to trade. And when we talk about freedom, I bet that its principles are held and embraced by most, if not all, of us dearly. As to trade, perhaps no one will disagree that everyone including those people living in remote areas practices it. History would also tell that even the earliest forms of civilization have these so-called “trading systems”. Now, if the concepts and principles of freedom and trade are being loved and practiced by most of us, then
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