Free Trade versus “Free Trade”, by Peter G. Klein

There’s a huge difference between actual free trade and “free trade” agreement and multinational organizations supposedly devoted to “free trade.” From Peter G. Klein at

NPR featured an unintentionally funny piece this morning on Donald Trump’s views toward the EU and free trade. The guest, former US ambassador to the EU Anthony Gardner, rightfully criticized the president’s view that “protection will lead to great prosperity and strength,” and called for continued global engagement by US companies and consumers. But he revealed, perhaps inadvertently, what political actors mean by “free trade.”

Specifically, Gardner expressed great skepticism towards the prospect of the US striking a bilateral free-trade deal with the UK, supposedly one of Trump’s top objectives in his upcoming meeting with new Prime Minister Theresa May. Free-trade agreements are complex, Gardner informed us, and negotiating one will be neither easy nor quick.

Why? To economists, free trade means the absence of government interference with trade: no tariffs, quotas, subsidies, or other interventions, explicit or implicit. To politicians, “free-trade” means a complex set of managed trade policies (Gardner even referred to the solemn obligation to “write the rules for global trade,” which in his mind is something either our government does or a foreign government does). Which imports will be taxed, and at what rates? Which exports will be subsidized, and at what levels? How will labor, environmental, and social policies be enforced by domestic and foreign governments? For government officials, countries are engaged in “free trade” when they agree on a complex package of explicit and implicit taxes and subsidies such that neither has a special advantage over the other, nor is disadvantaged relative to some other trading partner (however such advantages are defined).

To continue reading: Free Trade versus “Free Trade”

One response to “Free Trade versus “Free Trade”, by Peter G. Klein

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.