Free Trade

Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports) or quotas. According to the law of comparative advantage, the policy permits trading partners mutual gains from trade of goods and services.

Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from those that would emerge under deregulation. These governed prices are the result of government intervention in the market through price adjustments or supply restrictions, including protectionist policies. Such government interventions can increase as well as decrease the cost of goods and services to both consumers and producers. Since the mid-20th century, nations have increasingly reduced tariff barriers and currency restrictions on international trade. Other barriers, however, that may be equally effective in hindering trade include import quotas, taxes, and diverse means of subsidizing domestic industries. Interventions include subsidies, taxes and tariffs, non-tariff barriers, such as regulatory legislation and import quotas, and even inter-government managed trade agreements such as the North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA) (contrary to their formal titles) and any governmental market intervention resulting in artificial prices.

Read more about Free TradeFeatures of Free Trade, Opposition, Alternatives, In Literature

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... This is list of free trade agreements between two sides, where each side could be a country (or other customs territory), a trade bloc or an informal group of countries ... Every customs union, trade common market, economic union, customs and monetary union and economic and monetary union has also a free trade area ...
Free Trade - In Literature
... The value of free trade was first observed and documented by Adam Smith in The Wealth of Nations, in 1776 ... argument in opposition to mercantilism, the dominant view surrounding trade at the time, which held that a country should aim to export more than it imports, and thus amass ... Economy and Taxation, it makes a case for free trade based not on absolute advantage in production of a good, but on the relative opportunity costs of production ...
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Famous quotes containing the words trade and/or free:

    With respect to a true culture and manhood, we are essentially provincial still, not metropolitan,—mere Jonathans. We are provincial, because we do not find at home our standards; because we do not worship truth, but the reflection of truth; because we are warped and narrowed by an exclusive devotion to trade and commerce and manufacturers and agriculture and the like, which are but means, and not the end.
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