free trade

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Free Trade

The state in which there are few or no tariffs or other trade barriers discouraging international trade. For example, a country with a free trade policy does not subsidize favored industries in order to make them less expensive compared to international competitors. Proponents of free trade argue that it is more economically efficient and helps consumers by promoting competition to keep prices low. Critics contend that free trade is detrimental to local jobs, especially in the developed world.

free trade

the EXPORT and IMPORT of goods and services between countries totally unhindered by restrictions such as TARIFFS and QUOTAS. In general, free trade leads to a higher level of economic welfare in so far as it favours the location of economic activities in those countries best suited to their production, resulting, through the trade mechanism, in worldwide consumption gains in the form of lower prices and greater product availability. See INTERNATIONAL TRADE, TRADE INTEGRATION, WORLD TRADE ORGANIZATION.

free trade

the INTERNATIONAL TRADE that takes place without barriers, such as TARIFFS, QUOTAS and FOREIGN EXCHANGE CONTROLS, being placed on the free movement of goods and services between countries. The aim of free trade is to secure the benefits of international SPECIALIZATION. Free trade as a policy objective of the international community has been fostered both generally by the WORLD TRADE ORGANIZATION and on a more limited regional basis by the establishment of various FREE TRADE AREAS, CUSTOM UNIONS and COMMON MARKETS.

See GAINS FROM TRADE, EUROPEAN UNION, EUROPEAN FREE TRADE ASSOCIATION, TRADE INTEGRATION.

References in periodicals archive ?
First, disagreement over the choice of trade liberalisation indicators, whether it is actual trade [Learner (1980)] or tariffs and non-tariff berries [Sachs and Warner (1995)].
But if trade liberalisation leads to a faster growth of imports than exports and the nominal exchange rate is not an efficient balance of payments adjustment weapon, then output will need to contract to reduce imports, leading to welfare losses.
Trade liberalisation works when the inflexible rent-seekers are destroyed and the flexible rent-seekers change to other strategies.
Lamy said the WTO was working to strengthen the capacity of the large markets of the exporting countries, including the USA and Japan, promote trade liberalisation.
Article 19 of that agreement provides for regular reviews of the conditions of trade in basic agricultural products with a view to progressive bilateral trade liberalisation, since agriculture and fisheries are exempt from free movement.
Australian food exports to Asia remain strong, but action must be taken to ensure trade liberalisation efforts are not diluted.
Trade liberalisation and investment opportunities are also key to Chile's success, fuelled by trade agreements with the EU, the US-Chile FTA, the Korea-Chile FTA and the Trans-Pacific SEP.
This paper examines whether trade liberalisation played a role in shaping the wage structure of Pakistan in the late 1990s and early 2000.
The authors argue that this initiative could have a positive impact on trade liberalisation globally.
This is part of the regular process of progressive trade liberalisation in agriculture foreseen by the EEA (European Economic Area) Agreement, recalls the Commission.
The study tries to provide a useful guide to the likely impacts of agricultural trade liberalisation.