Thank you for this excellent synopsis. I
am a newcomer to trade theory. My judgement is insecure. Bear this in
mind when I blurt out these hypotheses: the notion of free trade is
predicated on the assumption that the neoclassic/neoliberal model of the
economy is useful — which perversely is what the so-called left has
come to believe with ardour. For my part, I think the neoclassic model
is not good enough to tell us much that is true of the economy from a
macroeconomic perspective.
So, theoretically, there may not be anything
like free trade. Notably, the assumptions underlying Ricardo’s defence of
free trade based on comparative advantage are simply not fulfilled in
the real world. So, we seem to have a false theory about something that
does not exist. For more see here:
Practically, there may also be no such thing as free trade. In
reality, cross-border transactions are fraught with special arrangements,
tariffs, quotas, discriminating specifications, you name it.
Many speak about free trade, including the economically ignorant
public and the so-called left, but only few look at the concrete trade
policies of countries. I have come across research that suggests the EU
applies a grater number of tariffs and higher tariffs than the US. I am
sure both countries place a good deal of bureaucratic barbed wire along their
trading borders. Just recently I have professionally come across the
fact that China has considerably higher tariffs in certain industrial
sectors that I had been concerned with than Europe and the US.
If what I am saying is not complete nonsense, then the thrust of your
post would appear even more significant. Trade is too important not to
manage it properly. Whether looking at the issue from the point of view
of a developed country or a LDC, we should discard ideological
stereotypes of the pro- and contra-free trade kind and face the fact
that trade is typically managed trade, not free trade, and try to
understand what reasons — and what good reasons — countries have to
manage their trade and how well they manage it in reality.
To that purpose it seems advisable to get as concrete in one’s
research as possible. One ought to look at the exact tariffs and other
trade policies of the EU, for instance. I guess, if we were to start
with the EU’s agricultural trade policies, we should very quickly get a
sense of the gap between the rhetoric of free trade and the reality of
massive protectionism and intervention.
To sum up: both for theoretical as well as practical reasons “free trade” may be little more than an ideological chimera.
Once one gets practically involved in trade, it turns out that
foreign trade like domestic trade and the simplest market interactions
(like buying tomatoes at a farmer’s market) are permeated with
regulations, hurdles, dos and don’ts, subsidies and other forms of
preferential treatment etc.
Let us not look for free trade, let us look for the way in which
people manage trade and discern how to do just that in an efficient and
hopefully mutually agreeable way.
