Free trade

Quick Facts: Who was Free trade?

Subject:

Free trade

Known for:

A policy advocating for the removal of government restrictions on international trade.

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2Day Chrono-Wiki & Primary Historical Archives

Origins & Early Life

Free trade is a trade policy that does not restrict imports or exports through legal barriers. In government, free trade is predominantly advocated by political parties that hold economically liberal positions, while economic nationalist political parties (usually on the left of the political spectrum) generally support protectionism, the opposite of free trade. Most nations today are members of the World Trade Organization multilateral trade agreements. States can unilaterally reduce regulations and duties on imports and exports, as well as form bilateral and multilateral free trade agreements. Free trade areas between groups of countries, such as the European Economic Area and the Mercosur open markets, establish a free trade zone among members while creating a protectionist barrier between that free trade area and the rest of the world.

Career & Major Achievements

Most governments still impose some protectionist policies that are intended to support local industry growth and employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes and non-tariff barriers, such as regulatory legislation. Historically, openness to free trade substantially increased from 1815 to the outbreak of World War I. Trade openness increased again during the 1920s, but collapsed (in particular in Europe and North America) during the Great Depression. Trade openness increased substantially again from the 1950s onwards (albeit with a slowdown during the 1973 oil crisis).

Enduring Legacy & Impact

Economists and economic historians contend that current levels of trade openness are the highest they have ever been. Economists are generally supportive of free trade. There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare while free trade and the reduction of trade barriers has a positive effect on economic growth and economic stability. However, in the short run, liberalization of trade can cause unequally distributed losses and the economic dislocation of workers in import-competing sectors. Free trade is characterised by certain principles such as unregulated access to markets and to market information.

Chronological Milestones & Life Events

1. 1815: 1815 Milestone — Historically, openness to free trade substantially increased from 1815 to the outbreak of World War I.
2. 1973: 1973 Milestone — Trade openness increased substantially again from the 1950s onwards (albeit with a slowdown during the 1973 oil crisis).

Historical Fact-Check Quiz: Free trade

True or False: “The primary benefit of free trade, according to economic theory, is that the gains for society outweigh the losses experienced by specific sectors.”

Answer (TRUE ⭕): Economic analysis consistently shows that while free trade creates winners and losers in the short run, the overall net gain to society from reduced trade barriers is greater than the associated losses.

Contemporary Figures & Related Historical Timelines

• Ada Lovelace — Historical peer (Born in 1815) (1815): Pioneering mathematician recognized as the first computer programmer.
• Adolph Menzel — Historical peer (Born in 1815) (1815): Pioneering German Realist master, celebrated for his detailed etchings and genre scenes.
• A. S. Neill — Historical peer (Died in 1973) (1973): Scottish progressive educator, founder of Summerhill, championing self-governance.
• Abebe Bikila — Historical peer (Died in 1973) (1973): Ethiopian Olympic marathon champion, known for his barefoot victories in Rome and Tokyo.

Frequently Asked Questions about Free trade