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C10 - Free Trade
Free trade has been a core principle of the post-World War 2 liberal international order, supported by institutions like the IMF and WTO. Supporters argue that free trade benefits all through increased efficiency and lower prices via comparative advantage. However, critics argue that while free trade may be economically efficient, nations must also consider political independence and impacts on domestic industries and jobs. Some propose strategic trade policies instead of pure free trade to balance economic and national interests.
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C10 - Free Trade
- 1. International Political Economy: FreeTrade The case for free trade. Critics.
- 2. Introduction • Increasing conflictover trade issues – Debates over trade policy – Occasional violent protests at global economic summits
- 3. The Liberal InternationalOrder: Principle (Ideal) of Free Trade A. Institutions 1. World Bank 2. International Monetary Fund 3. GATT (WTO 1995)
- 4. The Liberal InternationalOrder: Principle (Ideal) of Free Trade B. Origins of Post-War Liberal Order 1. Lessons of 1920s and 1930s: protectionism leads to depression, which leads to fascism, which leads to war 2. Free trade serves the interests of the US 3. Theoretical/philosophical/ideological belief in universal benefits of free trade; free trade as enlightened self-interest
- 5. The Case forFree Trade A. The origins of free trade 1. Adam Smith, David Ricardo, and the battle over the Corn Laws 2. The division of labor and the theory of comparative advantage B. Major arguments for free trade: efficiency and the primacy of the consumer 1. We should practice free trade among nations just like we practice it within nations: the economic logic does not change because national borders are crossed
- 6. The Case forFree Trade 2. Free trade always benefit consumers (and everyone is a consumer) C. The obstacles to free trade 1. Traditional barriers such as tariff and quotas 2. Nontariff barriers
- 7. Criticisms of FreeTrade A. More efficient, but so what? 1. Almost everyone concedes arguments about efficiency 2. Question is whether there are other criteria that should sometimes outweigh economic efficiency B. The difference between national and international trade 1. National borders do not change the economic case for free trade, but they add an important political component
- 8. Criticisms of FreeTrade 2. Nations need to worry about the consequences of dependence in ways people within nations do not 3. Consumer interests do not always advance the interests of the nation or society as a whole C. A different approach – Strategic trade policy
- 9. Conclusion • Why somuch conflict now? A. Differences in philosophy B. End of Cold War