Tradec Liberalization

Trade liberalization is the process of reducing or completely eliminating any government policies and practices that interfere with the free flow of goods and services among nations. Such policies and practices include not only tariffs (and subsidies that create the same artificial price disparity between imports and domestic goods) but also nontariff barriers, such as quotas or certain trade regulations. Although essentially an extension of capitalism—extending the idea of the domestic free market to an international market of free trade—trade liberalization nevertheless often finds opposition among some of those who are otherwise free market policy proponents, because of the long association of such policies with protectionism. Trade liberalization is the essential function of the World Trade Organization (WTO), and the Doha developmental round thereof has repeatedly stalled since 2001 because of disagreement over the liberalization of international agricultural trade.

Tariffs, subsidies, price supports, and other government-created and government-imposed devices that either increase the price of imports or decrease the price of domestic goods or exports all interfere with the natural prices that would result from unfettered supply and demand and generally increase the cost to the consumer. Over the course of the General Agreement on Tariffs and Trade, which preceded the WTO in the post-World War II years, most of the developed world has abandoned or significantly reduced its protectionist policies. The principal exception is agricultural trade; it is still common in much of the world to artificially lower the prices of domestic agricultural goods as protection against foreign competition.

Free trade not only allows for fair competition and fair prices but also enables specialization among countries. Different countries have different resources and can produce goods at different prices; if all nations can trade among each other without price interference, and if the costs incurred by trade (such as transportation) are sufficiently low or sufficiently offset by economies of scale, then in an ideal situation, everyone can enjoy the highest-quality goods at significantly lower prices. This and other general laissez-faire arguments were the initial arguments in favor of free trade in the 18th and 19th centuries, and they were largely persuasive. Since then—perhaps in particular since the development of modern economics and the history of American politics, which has taken capitalism for granted—moral arguments in favor of free trade have become common. Though the [Page 428]argument that government restrictions on trade abridge or even abrogate the sovereign rights of the consumer dates to the middle of the 19th century, it has been especially common in the United States with the rise of libertarianism (which is promoted by, but not synonymous with, the Libertarian Party). The right of a worker to exchange the fruits of his labor for the fruits of another's labor, with no one but that other worker having the right to interfere, is considered inalienable by this school. This extends naturally not only to the liberalization of trade and an unfettered domestic economy but also to minimal or nonexistent prohibition of particular goods and services, up to a point (it is more reasonable to construct a libertarian argument in favor of legalized alcohol or legalized prostitution than it is one in favor of legalized murder for hire).

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