One of the most frustrating aspect of those trade negotiations that are sold as ‘Free Trade Deals’ is that they are not truly ‘Free Trade’ and, instead, they are just selective liberalisations that work to enrich particular interests, that increase the disparities between those who are endowed with political resources and those who are not, and that work to foster global, systemic trade imbalances (whether that be frustrating, persistent trade deficits or gross trade surpluses). Of course, this leads to advocates of True Free Trade to have a bad name despite the fact that the purist position is the most morally humaneand efficient means through which to alleviate global poverty, improve peoples’ welfare and tackle corporatist privileges.
Free Trade, broadly speaking, in the purest sense of the term would involve a situation where there are no tariffs, subsidies, quotas and significant trade restrictions such as licensure restrictions (which all work to unduly restrict exports and imports and, thereby, impede the flow of goods, services and income globally). Such a situation would work to alleviate both domestic and global inequalities.
This is because tariffs, subsidies, quotas and licensure restrictions are all, effectively, forms of quantity and/or price controls and manipulation that impose incentive structures that redirect the expression of demand and supply across the affected markets inefficiently and in ways that they otherwise would not have been expressed in a more ‘natural’ equilibrium.
Spillovers onto other markets
This also has spillover effects on other markets – for example, targeting particular imports and particular countries’ exports with tariffs, licensure restrictions and/or indirectly by subsidising competitors’ products domestically will have an impact on other markets as consumers and producers are forced to substitute spending and production accordingly.
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