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.


References in periodicals archive ?
By way of a conclusion to this section, it is curious that although the political economy of trade policy dominates Irwin's own empirical-oriented publications, it does not figure in his intellectual history of free trade, Against the Tide.
Douglas Irwin, an associate professor of business economics at the University of Chicago and a scholar at the American Enterprise Institute, has produced a dense but lucid and carefully reasoned volume about the intellectual history of free trade and the recurring attempts to dislodge its place near the forefront of universally accepted economic wisdom.

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