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So why would one argue that free trade is the best policy? For starters, it increases efficiency, competition, and variety available for consumption. This is mainly due to the absence of tariffs and trade barriers that complicate and slow down the market. Free trade also yields the consumption and production effects. With the consumption effect, countries are given the opportunity to trade at different prices; likewise, the production effect illustrates how trade is making you more efficient in the context of international trade. After all, gains from trade are analogous with technological progress.
Another way to look at the advantages of free trade is to look at the disadvantages of protectionism. Tariffs and quotas are basically just "blunt" policy tools that have several, better alternatives. Moreover, protection introduces a high possibility of mutual loss.
Politics is a huge factor, possibly even the determining factor in the rise and fall of free trade. It is the root of motivation for some regimes to design their economic policy after free trade in an effort to last longer and to encourage more comprehensive adherence to rules. Perhaps the most sensible way to do this is through the hegemonic stability theory. Free trade regimes are most stable and strongest when the system has a hegemonic distribution of power. The single most powerful state will choose to establish free trade because such a system will feed its own strength and thus stabilize the system (Brawley 157).
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- Gore and other supporting politicians are expecting when they propose a "new way on trade." ...
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Suranovic, Gore, Bibliography Brawley,
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trade, free trade, free and fair, fair trade, trade policy, international trade, market, level playing field, Trade Federation, hegemonic stability theory, labor and materials, protectionism, rules and regulations, tool, International Political Economy, market economy, poor countries, economic policy, world market, international market, Another way, international agreements, technological progress, living standards, pollution, import taxes, equal opportunities, economic competition, collective good, working conditions, New ideas, long run, technical assistance, general public, tariffs, interests, regimes, the free, stable, the status quo, a level, the market, policies, the working class, GATT, a question, side effects, polluting, redress, sensible,