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Free trade

Free trade is an economic concept referring to selling of products between countries without tariffs or other trade barriers. International trade is often constricted by different national taxes, other fees imposed on exported and imported goods, as well as non-tariff regulations on imported goods, and free trade is against all these restrictions.

Some multi-nation entities, such as the European Union, have implemented free trade in some forms between their member nations (customs union). However, there is continuing debate whether free trade would help third world nations[?] with different economic problems.

Many economists argue that free trade increases the standard of living through the law of comparative advantage and economies of scale.

Others argue that free trade allows developed nations to exploit undeveloped nations and to destroy local industry in addition to circumventing social and labor standards. In addition, some advocates of free trade have complained that developed nations tend to insist that developing nations open their markets to industrial products from the developed world, yet refuse to open their markets to agricultural goods from the developing world.

Intellectual property and free trade

Historically, the free trade movement was skeptical and even hostile to the notion of intellectual property, which was regarded as monopolistic and harmful to a free, competitive economy. Indeed, during the late 19th century, free trade advocates succeeded in reducing the length of the patents available in many European countries. The Netherlands even abolished its patent system (temporarily, as it turned out).

The 19th century anti-patent cause failed largely because the recession of 1874 discredited the free trade movement of the time (and also because patent advocates used a public relations campaign which was remarkably sophisticated for its time).

It is thus quite remarkable (some would even say ironic) that corporations lobbying for expanded intellectual property privileges have succeeded in including TRIPS, a very strong treaty on intellectual property rights, as a membership requirement for the World Trade Organization, the international organization dedicated to furthering the cause of free trade.

See also:

References

  1. Fritz Machlup & Edith Penrose, "The Patent Controversy in the 19th Century", Journal of Economic History, 10 (1) pp 1-29, 1950.

Links

Pro-free trade/free-market:

Opponents of free trade:



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