Ashish Ramani (AXR20025)- Assignment 1
The Political Realities of “Free Trade”
The debate surrounding free trade and the role of the World Trade Organization (WTO) in regulating the global trading system remains contentious. British historian Thomas Macaulay's 19th century view that free trade is "one of the greatest blessings which a government can confer on a people" but is "in almost every country unpopular" still rings true today (Macaulay, 1824). The benefits of free trade, such as lower
consumer prices and economic efficiency, are often overshadowed by concerns over job losses, harm to specific industries, and loss of national sovereignty.
Critics argue that free trade agreements facilitated by the WTO undermine domestic policymaking, labor and environmental standards, and benefit large corporations at the expense of workers. The perceived unfairness of WTO dispute resolutions and forced opening of markets fuels populist backlash. This builds
political pressure to restrict imports, protect vulnerable industries, and oppose new trade deals, even though economists widely agree that free trade provides net economic benefits (Whaples, 2006).
The roots of the modern global trading system can be traced back centuries, as Adam Smith critiqued mercantilism and David Ricardo formulated the theory of comparative advantage that remains foundational to the case for free trade (Butler, 2022; Rothbard, 2012). We learned how 19th century Britain was an early pioneer of free trade, repealing protectionist Corn Laws in 1846 and inkling trade deals with France. Britain reaped economic gains from embracing open markets. However, other nations later resurrected protectionist policies and trade tensions, contributing to rising geopolitical tensions before World War I.
Despite insights from early economists, protectionist pressures have often reemerged, as evident in more recent trade disputes between the U.S. and China that some argue have been ineffective (Lighthizer, 2020; McDonald, 2012). The Biden Administration has aimed to strengthen supply chains through executive orders and trade policy initiatives. However, U.S.-China tensions continue impacting global supply chains and trade relations. The contentious debate surrounding global trade regulation endures.
In my opinion, free trade delivers economic benefits but also imposes adjustment costs that fuel popular resistance. The WTO's perceived lack of transparency and democratic oversight will continue to undermine its credibility. While the advantages of open markets make outright protectionism inefficient, policymakers may need to do more to mitigate free trade's disruptions in order to sustain public support.
References
Macaulay, T.B. (1824). Speech to the House of Commons on a motion for the repeal of duties on imported wool and woollens. Hansard's Parliamentary Debates.
Whaples, R. (2006). Do Economists Agree on Anything? Yes! The Economists' Voice, 3(9). https://doi.org/10.2202/1553-3832.1156
Rothbard, M.N. (2012). The Ricardian Law of Comparative Advantage. Mises Institute. https://mises.org/library/ricardian-law-comparative-advantage
Butler, E. (2022). The Condensed Wealth of Nations. Adam Smith Research Institute.
Lighthizer, R. (2020). Of Course You Know, This Means War: A Strategic Update on the Trump Trade War. Center for Strategic & International Studies. https://www.csis.org/analysis/course-you-know-means-
war-strategic-update-trump-trade-war
