Argument: Free trade is fair trade

Issue Report: Free trade


An artificial distinction has been drawn between “free trade” and “fair trade.” The idea that free trade is fair only if countries share identical labor costs and economic regulations or if domestic producers are compensated for market losses to more compet­itive foreign producers is false. The economic bene­fits of free trade derive partly from the fact that trading partners are different, allowing any country embracing world markets a chance to be competi­tive. Free trade is fair when countries with different advantages are allowed to trade with a minimum of restriction and capitalize on those differences.
Low wage costs, access to cheap capital, educa­tion levels, and other fundamental variables all play a role in determining the comparative advantages that one country has over another in the global mar­ketplace. To “fairly” equalize those differences— provided those differences are based on a country’s economic and demographic reality—only negates or reduces a country’s ability to benefit from partic­ipating in the global trade system.
Such ‘fairness’ also prevents countries from real­izing the tangible gains from freer trade: a more competitive economic environment and better, more efficient domestic resource allocation. These positive effects drive greater long-term economic potential, create economic opportunity, better pro­mote a cleaner environment, and improve living standards at home.
Free trade allows a county to compete in the glo­bal market according to its fundamental economic strengths and to reap the productivity and efficiency gains that promote long-run wealth and prosperity. In reality, there is no distinction between free trade and truly fair trade.”