Editing Free trade (section)

== History ==
{{See also|Timeline of international trade|Trade#History}}

=== Early era ===
{{Further|Anti–Corn Law League}}
[[File:David Ricardo (grey).jpg|thumb|upright=0.75|[[David Ricardo]] ]]
The notion of a free trade system encompassing multiple sovereign states originated in a rudimentary form in 16th century [[Imperial Spain]].<ref name="Arrighi1994">{{cite book|author=Giovanni Arrighi|author-link=Giovanni Arrighi|title=The Long Twentieth Century: Money, Power, and the Origins of Our Times|url=https://archive.org/details/longtwentiethcen00arri|url-access=registration|year=1994|publisher=Verso|isbn=978-1859840153|page=[https://archive.org/details/longtwentiethcen00arri/page/58 58]}}</ref> American [[jurist]] [[Arthur Nussbaum]] noted that Spanish theologian [[Francisco de Vitoria]] was "the first to set forth the notions (though not the terms) of freedom of commerce and freedom of the seas".<ref name="Nussbaum1947">{{cite book|author=Arthur Nussbaum|author-link=Arthur Nussbaum|title=A concise history of the law of nations|url=https://books.google.com/books?id=TxkQAQAAMAAJ|year=1947|publisher=Macmillan Co.|page=62}}</ref> Vitoria made the case under principles of ''[[jus gentium]]''.<ref name="Nussbaum1947"/> However, it was two early British economists [[Adam Smith]] and [[David Ricardo]] who later developed the idea of free trade into its modern and recognizable form.

Economists who advocated free trade believed trade was the reason why certain civilizations prospered economically. For example, Smith pointed to increased trading as being the reason for the flourishing of not just [[History of the Mediterranean region|Mediterranean]] cultures such as [[Egypt Eyalet|Egypt]], [[Ancient Greece|Greece]] and [[Roman Empire|Rome]], but also of [[Bengal Presidency|Bengal]] ([[East India Company|East India]]) and [[Qing dynasty|China]]. [[Dutch Republic|Netherlands]] prospered greatly after [[Eighty Years' War|throwing off Spanish Imperial rule]] and pursuing a policy of free trade.<ref name="Appleby2010">{{Cite book|last=Appleby|first=Joyce|url=https://archive.org/details/relentlessrevolu00appl|title=The Relentless Revolution: A History of Capitalism|publisher=W. W. Norton & Company|year=2010|location= New York|isbn=978-0393068948|author-link=Joyce Appleby|url-access=registration}}</ref> This made the free trade/mercantilist dispute the most important question in economics for centuries. Free trade policies have battled with [[Mercantilism|mercantilist]], [[Protectionism|protectionist]], [[Isolationism|isolationist]], [[Socialism|socialist]], [[Populism|populist]] and other policies over the centuries.

The [[Ottoman Empire]] had [[Economic liberalism|liberal]] free trade policies by the 18th century, with origins in [[capitulations of the Ottoman Empire]], dating back to the first commercial treaties signed with France in 1536 and taken further with [[Capitulation (treaty)|capitulations]] in 1673, in 1740 which lowered [[Duty (economics)|duties]] to only 3% for imports and exports and in 1790. Ottoman free trade policies were praised by British economists advocating free trade such as [[J. R. McCulloch]] in his ''Dictionary of Commerce'' (1834), but criticized by British politicians opposing free trade such as [[Prime Minister of the United Kingdom|Prime Minister]] [[Benjamin Disraeli]], who cited the Ottoman Empire as "an instance of the injury done by unrestrained competition" in the 1846 [[Corn Laws]] debate, arguing that it destroyed what had been "some of the finest manufactures of the world" in 1812.<ref>{{cite book|title=Economics and World History: Myths and Paradoxes|author=Paul Bairoch|publisher=[[University of Chicago Press]]|year=1995|url=https://www.scribd.com/document/193124153/Economics-and-World-History-Myths-and-Paradoxes-Paul-Bairoch|pages=31–32|author-link=Paul Bairoch|access-date=2017-08-16|archive-date=2017-10-12|archive-url=https://web.archive.org/web/20171012060209/https://www.scribd.com/document/193124153/Economics-and-World-History-Myths-and-Paradoxes-Paul-Bairoch|url-status=dead}}</ref>

[[File:Droits de douane (France, UK, US).png|thumb|Average tariff rates in France, the United Kingdom and the United States]]
Trade in [[British America|colonial America]] was regulated by the British mercantile system through the [[Acts of Trade and Navigation]]. Until the 1760s, few colonists openly advocated for free trade, in part because regulations were not strictly enforced (New England was famous for smuggling), but also because colonial merchants did not want to compete with foreign goods and shipping. According to historian Oliver Dickerson, a desire for free trade was not one of the causes of the [[American Revolution]]. "The idea that the basic mercantile practices of the eighteenth century were wrong", wrote Dickerson, "was not a part of the thinking of the Revolutionary leaders".<ref>Dickerson, ''The Navigation Acts and the American Revolution'', p. 140.</ref>

Free trade came to what would become the United States as a result of the [[American Revolution]]. After the British Parliament issued the [[Prohibitory Act]] in 1775, blockading colonial ports, the [[Second Continental Congress|Continental Congress]] responded by effectively declaring economic independence, opening American ports to foreign trade on 6 April 1776 – three months before declaring sovereign independence. According to historian John W. Tyler, "[f]ree trade had been forced on the Americans, like it or not".<ref>Tyler, ''Smugglers & Patriots'', p. 238.</ref>

In March 1801, the Pope [[Pius VII]] ordered some liberalization of trade to face the economic crisis in the [[Papal States]] with the ''[[motu proprio]]'' ''[[Le più colte]]''. Despite this, the export of national corn was forbidden to ensure the food for the [[Papal States]].

[[File:British ships in Canton.jpg|thumb|Britain waged two [[Opium Wars]] to force China to legalize the [[opium trade]] and to open all of China to British merchants.]]
In Britain, free trade became a central principle [[Economic history of the United Kingdom#Free trade|practiced by the repeal of the Corn Laws in 1846]]. Large-scale agitation was sponsored by the [[Anti–Corn Law League]]. Under the [[Treaty of Nanking]], China opened five [[treaty ports]] to world trade in 1843. The first free trade agreement, the [[Cobden-Chevalier Treaty]], was put in place in 1860 between Britain and France which led to successive agreements between other countries in Europe.<ref>{{cite book|last1=International Monetary Fund Research Dept.|title=World Economic Outlook, May 1997: Globalization: Opportunities and Challenges|date=1997|publisher=International Monetary Fund|isbn=978-1455278886|page=113|url=https://books.google.com/books?id=JCOzhl3848MC&pg=PA113}}</ref>

Many [[History of liberalism#Classical liberalism|classical liberals]], especially in 19th and early 20th century Britain (e.g. [[John Stuart Mill]]) and in the United States for much of the 20th century (e.g. [[Henry Ford]] and Secretary of State [[Cordell Hull]]), believed that free trade promoted peace. [[Woodrow Wilson]] included free-trade rhetoric in his "[[Fourteen Points]]" speech of 1918:

{{blockquote|The program of the world's peace, therefore, is our program; and that program, the only possible program, all we see it, is this: [...]

3. The removal, so far as possible, of all economic barriers and the establishment of equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.<ref>[[s:Fourteen Points Speech|Fourteen Points]]</ref>}}

According to economic historian Douglas Irwin, a common myth about United States trade policy is that low tariffs harmed American manufacturers in the early 19th century and then that high tariffs made the United States into a great industrial power in the late 19th century.<ref name=":5">{{Cite news|url=https://www.economist.com/news/books-and-arts/21731616-douglas-irwin-agrees-trade-policy-important-all-manner-powers-are-wrongly|title=A historian on the myths of American trade|newspaper=The Economist|access-date=2017-11-26|language=en}}</ref> A review by the ''Economist'' of Irwin's 2017 book ''Clashing over Commerce: A History of US Trade Policy'' notes:<ref name=":5"/>

<blockquote>Political dynamics would lead people to see a link between tariffs and the economic cycle that was not there. A boom would generate enough revenue for tariffs to fall, and when the bust came pressure would build to raise them again. By the time that happened, the economy would be recovering, giving the impression that tariff cuts caused the crash and the reverse generated the recovery. Mr Irwin also methodically debunks the idea that protectionism made America a great industrial power, a notion believed by some to offer lessons for developing countries today. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913, the admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. But American growth during its protectionist period was more to do with its abundant resources and openness to people and ideas.</blockquote>

According to [[Paul Bairoch]], since the end of the 18th century, the United States has been "the homeland and bastion of modern protectionism". In fact, the United States never adhered to free trade until 1945. For the most part, the [[Democratic-Republican Party|Jeffersonians]] strongly opposed protectionism. In the 19th century, statesmen such as Senator [[Henry Clay]] continued [[Alexander Hamilton]]'s themes within the [[Whig Party (United States)|Whig Party]] under the name [[American System (economic plan)|American System]]. The opposition [[Democratic Party (United States)|Democratic Party]] contested several elections throughout the 1830s, 1840s and 1850s in part over the issue of the tariff and protection of industry.<ref>[[Larry Schweikart]], ''What Would the Founders Say?'' (New York: Sentinel, 2011), pp. 106–124.</ref> The Democratic Party favored moderate tariffs used for government revenue only while the Whigs favored higher protective tariffs to protect favored industries. The economist [[Henry Charles Carey]] became a leading proponent of the American System of economics. This mercantilist American System was opposed by the Democratic Party of [[Andrew Jackson]], [[Martin Van Buren]], [[John Tyler]], [[James K. Polk]], [[Franklin Pierce]] and [[James Buchanan]].

The fledgling [[Republican Party (United States)|Republican Party]] led by [[Abraham Lincoln]], who called himself a "Henry Clay tariff Whig", strongly opposed free trade and implemented a 44% tariff during the [[American Civil War|Civil War]], in part to pay for railroad subsidies and for the war effort and in part to protect favored industries.<ref>{{cite web|last=Lind|first=Matthew|title=Free Trade Fallacy|url=http://www.newamerica.net/index.cfm?pg=article&DocID=1080 |publisher=Prospect|access-date=3 January 2011 |archive-url = https://web.archive.org/web/20060106154801/http://www.newamerica.net/index.cfm?pg=article&DocID=1080 |archive-date = 6 January 2006}}</ref> [[William McKinley]] (later to become President of the United States) stated the stance of the Republican Party (which won every election for president from 1868 until 1912, except the two non-consecutive terms of [[Grover Cleveland]]) as thus:

{{blockquote|Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man. [It is said] that protection is immoral [...]. Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefitting mankind everywhere. Well, they say, 'Buy where you can buy the cheapest'…. Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: 'Buy where you can pay the easiest.' And that spot of earth is where labor wins its highest rewards.<ref>William McKinley speech, October 4, 1892 in Boston, MA William McKinley Papers (Library of Congress)</ref>}}

During the interwar period, [[economic protectionism]] took hold in the United States, most famously in the form of the [[Smoot–Hawley Tariff Act]] which is credited by economists with the prolonging and worldwide propagation of the [[Great Depression]].<ref name="Eun & Resnick 2011">{{Cite book | title = International Financial Management, 6th Edition | author = Eun, Cheol S. | author2 = Resnick, Bruce G. | year = 2011 | publisher = McGraw-Hill/Irwin | location = New York | isbn = 978-0078034657}}</ref>{{rp|33}}<ref>{{Cite news|url=https://www.wsj.com/articles/steve-bannons-bad-history-1505861920|title=Steve Bannon's Bad History|last=Irwin|first=Douglas A.|date=2017-09-19|work=Wall Street Journal|access-date=2017-09-20|language=en-US|issn=0099-9660}}</ref> From 1934, trade liberalization began to take place through the [[Reciprocal Trade Agreements Act]].

=== Post–World War II ===
Since the end of [[World War II]], in part due to industrial size and the onset of the [[Cold War]], the United States has often been a proponent of reduced tariff-barriers and free trade. The United States helped establish the [[General Agreement on Tariffs and Trade]] and later the [[World Trade Organization]], although it had rejected an earlier version in the 1950s, the [[International Trade Organization]].<ref>{{cite web|url=http://www.wto.org/english/res_e/reser_e/pera9707.pdf |title=The New Liberallism : Trade Policy Developments in Emerging Markets|date=January 1997|website=Wto.org|access-date=2 March 2022}}</ref> Since the 1970s, United States governments have negotiated managed-trade agreements, such as the [[North American Free Trade Agreement]] in the 1990s, and the [[Dominican Republic–Central America Free Trade Agreement]] in 2006.

In Europe, [[Inner Six|six countries]] formed the [[European Coal and Steel Community]] in 1951 which became the [[European Economic Community]] (EEC) in 1958. Two core objectives of the EEC were the development of a common market, subsequently renamed the [[single market]], and establishing a [[customs union]] between its member states. After expanding its membership, the EEC became the [[European Union]] in 1993. The European Union, now the world's largest single market,<ref>{{cite web|title=EU position in world trade|url=http://ec.europa.eu/trade/policy/eu-position-in-world-trade/|publisher=European Commission|access-date=24 May 2015}}</ref> has [[European Union free trade agreements|concluded free trade agreements]] with many countries around the world.<ref>{{cite web|title=Agreements|url=http://ec.europa.eu/trade/policy/countries-and-regions/agreements/|publisher=European Commission|access-date=17 March 2016}}</ref>

=== Modern era ===
{{Main|World Trade Organization|List of multilateral free trade agreements|List of bilateral free trade agreements}}
[[File:1 singapore city skyline dusk panorama 2011.jpg|thumb|left|upright=1.0|[[Singapore]] is the top country in the [[Global Enabling Trade Report|Enabling Trade Index]].]]
{{neoliberalism sidebar}}

Most countries in the world are members of the [[World Trade Organization]]<ref>{{cite web|title=Members and Observers|url=http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm|publisher=World Trade Organisation|access-date=3 January 2011}}</ref> which limits in certain ways but does not eliminate tariffs and other trade barriers. Most countries are also members of regional free trade areas that lower trade barriers among participating countries. The European Union and the United States are negotiating a [[Transatlantic Trade and Investment Partnership]]. in 2018, the [[Comprehensive and Progressive Agreement for Trans-Pacific Partnership]] came into force, which includes eleven countries that have borders on the [[Pacific Ocean]].

==== Degree of free trade policies ====
Free trade may apply to trade in [[goods and services]]. Non-economic considerations may inhibit free trade as a country may espouse free trade in principle but ban certain drugs, such as [[ethanol]], or certain practices, such as [[prostitution]], and limiting international free trade.<ref>{{cite book|last1=Ditmore|first1=Melissa Hope|title=Encyclopedia of prostitution and sex work|url=https://books.google.com/books?id=SLpZAAAAYAAJ|publisher=Greenwood Press|date=2006|page=581|isbn=978-0313329685|access-date=1 June 2018|quote=Let us by all means apply the sacred principles of free trade to trade in vice, and regulate the relations of the sexes by the higgling of the market and the liberty of private contract.}}</ref>

Some degree of protectionism is nevertheless the norm throughout the world. From 1820 to 1980, the average tariffs on manufactures in twelve industrial countries ranged from 11 to 32%. In the developing world, average tariffs on manufactured goods are approximately 34%.<ref>Chang (2003), ''Kicking Away the Ladder'', p. 66</ref> The American economist [[C. Fred Bergsten]] devised the bicycle theory to describe [[trade policy]]. According to this model, trade policy is dynamically unstable in that it constantly tends towards either liberalization or protectionism. To prevent falling off the bike (the disadvantages of protectionism), trade policy and [[multilateral trade negotiations]] must constantly pedal towards greater liberalization. To achieve greater liberalization, decision makers must appeal to the greater welfare for consumers and the wider national economy over narrower parochial interests. However, Bergsten also posits that it is also necessary to compensate the losers in trade and help them find new work as this will both reduce the backlash against globalization and the motives for trades unions and politicians to call for protection of trade.<ref>Destler, Mac and Noland, Marcus (July 2, 2014). [https://www.researchgate.net/publication/237246444_Constant_Ends_Flexible_Means_C_Fred_Bergsten_and_the_Quest_for_Open_Trade Constant Ends, Flexible Means: C. Fred Bergsten and the Quest for Open Trade]. [[Peterson Institute for International Economics]].</ref>

[[File:20041120-1 bushchinamtg-1-515h.jpg|thumb|[[George W. Bush]] and [[Hu Jintao]] of China meet while attending an [[Asia-Pacific Economic Cooperation|APEC]] summit in Santiago de Chile, 2004.]]

In ''Kicking Away the Ladder'', development economist [[Ha-Joon Chang]] reviews the history of free trade policies and economic growth and notes that many of the now-industrialized countries had significant barriers to trade throughout their history. The United States and Britain, sometimes considered the homes of free trade policy, employed protectionism to varying degrees at all times. Britain abolished the [[Corn Laws]] which restricted import of grain in 1846 in response to domestic pressures and reduced protectionism for manufactures only in the mid 19th century when its technological advantage was at its height, but tariffs on manufactured products had returned to 23% by 1950. The United States maintained weighted average tariffs on manufactured products of approximately 40–50% up until the 1950s, augmented by the natural protectionism of high transportation costs in the 19th century.<ref name="auto">Chang (2003), ''Kicking Away the Ladder'', p. 17</ref> The most consistent practitioners of free trade have been Switzerland, the Netherlands and to a lesser degree Belgium.<ref>Chang (2003), ''Kicking Away the Ladder'', p. 59</ref> Chang describes the [[export-oriented industrialization]] policies of the [[Four Asian Tigers]] as "far more sophisticated and fine-tuned than their historical equivalents".<ref>Chang (2003), ''Kicking Away the Ladder'', p. 50</ref>

===== Free trade in goods =====
{{Main|Global Enabling Trade Report}}

The Global Enabling Trade Report measures the factors, policies and services that facilitate the trade in goods across borders and to destinations. The index summarizes four sub-indexes, namely market access; border administration; transport and communications infrastructure; and business environment. As of 2016, the top 30 countries and areas were the following:<ref>[http://reports.weforum.org/global-enabling-trade-report-2016/enabling-trade-rankings/ "Global Enabling Trade Index"].</ref>

{{Columns-list|colwidth=22em|
# {{SIN}} 6.0
# {{flag|Netherlands}} 5.7
# {{flag|Hong Kong}} 5.7
# {{LUX}} 5.6
# {{SWE}} 5.6
# {{FIN}} 5.6
# {{AUT}} 5.5
# {{UK}} 5.5
# {{GER}} 5.5
# {{BEL}} 5.5
# {{SUI}} 5.4
# {{DEN}} 5.4
# {{FRA}} 5.4
# {{EST}} 5.3
# {{ESP}} 5.3
# {{JAP}} 5.3
# {{NOR}} 5.3
# {{flag|New Zealand}} 5.3
# {{flag|Iceland}} 5.3
# {{flag|Ireland}} 5.3
# {{CHI}} 5.3
# {{USA}} 5.2
# {{UAE}} 5.2
# {{CAN}} 5.2
# {{CZE}} 5.1
# {{AUS}} 5.1
# {{KOR}} 5.0
# {{POR}} 5.0
# {{LIT}} 5.0
# {{ISR}} 5.0
}}