Free trade is a moral issue. When government stands between buyers and sellers and imposes tariffs, quotas, or other barriers, it interferes with the right of people to engage in exchange. It also impedes all the morally positive effects of trade.
Trade between people in different countries is no different from trade between people in different neighborhoods, cities, or states. International borders have no bearing on the right to trade or on the benefits of trade.
Notwithstanding, there is a wide range of trade freedom around the world. The Atlas Economic Research Foundation (which I support) established AtlasFreeTrade.org in 2013, and one of the resources on the site is an interactive Trade Index Map. This displays the Freedom to Trade score and ranking for 152 countries, according to data from the Fraser Institute’s Economic Freedom of the World Report. For example, Chile ranks as the 13th freest, Canada is 48th, the United States is 40th, and Venezuela is 151st.
Economists have long recognized the merits of free trade. As Daniel Griswold has observed, “Free trade promotes liberty, prosperity, and peace.” As Donald Boudreaux has discussed, it also allows for cultural enrichment.
The desirability of unilateral removal of barriers is also well known. Why, then, have only Hong Kong and Singapore taken this step?
As with everything else government does, its actions on trade are based on its own interests and those of its cronies. The unilateral removal of barriers would deprive politicians of control over trade and the opportunity to provide special treatment to favored industries. Politicians then exploit voters’ economic ignorance and “anti-foreign bias” to restrict both trade and immigration. They are motivated to increase their power and get re-elected, not to enhance freedom.
The result is that governments that address trade barriers tend to do so through pursuing international agreements. This allows them to continue to control trade, bestow favors on firms, and promote economic nationalism.
The focus on protecting special interests makes the negotiation of such agreements farcical. As Andrew Coyne of the National Post wrote regarding the Canada-European Union talks,
Failed policies become sacred, to be defended to the last. Obviously beneficial reforms become unthinkable — or not until the other side does likewise. The whole situation is an absurdity. It’s like a hostage negotiation in which both sides have guns to their own heads.
International trade negotiations are subject to failure. Even when they are successful, they delay the removal of domestic barriers. Also, the scope of agreements is limited to the countries that are parties. This leaves restrictions in place for trade with other countries.
Milton Friedman and Rose D. Friedman famously recommended:
We could say to the rest of the world: We believe in freedom and intend to practice it. We cannot force you to be free. But we can offer full cooperation on equal terms to all. Our market is open to you without tariffs or other restrictions.
Any governments that have the wisdom and ability unilaterally to remove trade barriers should do so. This is the moral path and the one that will foster peace and prosperity.
This article first appeared in the PanAm Post.
[Updated links: Sept. 7, 2020]
