<p>Free trade in theory allows for a greater division of labor by allowing countries as a whole to specialize rather than a section of each country specializing. In theory this should make every country involved wealthier as they can focus on doing more of what they're good at. Its the country level version of division of labor and trading in general.</p>

CC BY-SA 3.0
2017-08-14T03:44:37.747Z
2017-08-14T03:44:37.747Z
mike
<p>The theory behind free trade is denominated <a href="https://en.wikipedia.org/wiki/Comparative_advantage" rel="nofollow noreferrer">comparative advantage</a>, and as mike stated, the advantage is that a country, as a whole, benefits from specializing in the fields at which it is best, as it will get more than it would if it would produce everything alone.</p>

<p>In practice, a big advantage is the ability to operate for a bigger market, reaping economies of scale. This is particularly advantageous for small countries.</p>

<p>The downside is that, although free trade will make the country as a whole richer, it wont make the society necessarily equally richer, so <a href="https://en.wikipedia.org/wiki/Trade_and_development" rel="nofollow noreferrer">it wont guarantee that an economy will develop</a>. This connects with the concept of exploitative trade and <a href="https://en.wikipedia.org/wiki/Fair_trade" rel="nofollow noreferrer">fair trade</a>: by entering international trade, developing countries might leave their economies vulnerable to foreign companies or governments, sometimes in critical sectors such as food and energy.</p>

CC BY-SA 3.0
2017-08-14T15:24:13.660Z
Are there ways a country can organise itself to mitigate the downsides of a FTA? Are there any examples of such?
Tirous
CC BY-SA 3.0
2017-08-14T15:38:08.800Z
I can't think of a particular answer for it... I would look into the World Trade Organization and World Bank for more info on that. Perhaps related to it is the WB website http://www.doingbusiness.org/
There is also the fair trade debate: https://en.wikipedia.org/wiki/Fair_trade_debate |


When I think of specific cases, China managed to improve their status from low wage exploitative trade to be a huge global market with their size. However several african countries find it hard to develop despite having open trade. South America might hold interesting cases...
JoaoBotelho
CC BY-SA 3.0
2017-08-14T15:49:34.653Z
This research (1958) goes further on the topic: http://www.depfe.unam.mx/doctorado/teorias-crecimiento-desarrollo/myint_1958.pdf
JoaoBotelho
CC BY-SA 3.0
2017-08-14T08:31:19.233Z
2017-08-14T08:31:19.233Z
JoaoBotelho
<p>There's been a lot of talk about Free Trade. People seem to either know nothing about it, or they seem to either support or oppose it with such passion that if you didn't know any better, you would think they were actually at war.</p>

<p>Now, I often don't like so called "Free Trade Agreements" like NAFTA, TPP, RCEP, CETA, etc. but more often than not my aversion to them tends to be based on toxic copyright provisions and a lack of Fair Use protections, not necessarily the actual macroeconomic effects of the trade deal as a whole.</p>

<p>Thus, I have to ask: what exactly is the argument in favor of Free Trade? What exactly is it trying to achieve? And are there ways a nation can address the negative effects of such deals? And what is Free Trade NOT?</p>

CC BY-SA 3.0
2017-08-14T08:32:28.370Z
This question is quite similar to this: https://economics.stackexchange.com/questions/1714/have-there-been-instances-where-economists-have-advocated-a-trade-embargo?rq=1
JoaoBotelho
<international-trade><free-trade>
What exactly is the argument for Free Trade?
Tirous
# What exactly is the argument for Free Trade?

(Asked by: username_0 on 2017-08-13)

There's been a lot of talk about Free Trade. People seem to either know nothing about it, or they seem to either support or oppose it with such passion that if you didn't know any better, you would think they were actually at war.

Now, I often don't like so called "Free Trade Agreements" like NAFTA, TPP, RCEP, CETA, etc. but more often than not my aversion to them tends to be based on toxic copyright provisions and a lack of Fair Use protections, not necessarily the actual macroeconomic effects of the trade deal as a whole.

Thus, I have to ask: what exactly is the argument in favor of Free Trade? What exactly is it trying to achieve? And are there ways a nation can address the negative effects of such deals? And what is Free Trade NOT?

**Tags:** international-trade, free-trade

> **Comments:**
> **username_1**: This question is quite similar to this: https://economics.stackexchange.com/questions/1714/have-there-been-instances-where-economists-have-advocated-a-trade-embargo?rq=1  

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## 2 answers

### Answer by username_1 on 2017-08-14. Score: 4 | Accepted answer

The theory behind free trade is denominated [comparative advantage](https://en.wikipedia.org/wiki/Comparative_advantage), and as username_2 stated, the advantage is that a country, as a whole, benefits from specializing in the fields at which it is best, as it will get more than it would if it would produce everything alone.

In practice, a big advantage is the ability to operate for a bigger market, reaping economies of scale. This is particularly advantageous for small countries.

The downside is that, although free trade will make the country as a whole richer, it wont make the society necessarily equally richer, so [it wont guarantee that an economy will develop](https://en.wikipedia.org/wiki/Trade_and_development). This connects with the concept of exploitative trade and [fair trade](https://en.wikipedia.org/wiki/Fair_trade): by entering international trade, developing countries might leave their economies vulnerable to foreign companies or governments, sometimes in critical sectors such as food and energy.

> **Comments:**
> **username_0**: Are there ways a country can organise itself to mitigate the downsides of a FTA? Are there any examples of such?  
> **username_1**: I can't think of a particular answer for it... I would look into the World Trade Organization and World Bank for more info on that. Perhaps related to it is the WB website http://www.doingbusiness.org/ There is also the fair trade debate: https://en.wikipedia.org/wiki/Fair_trade_debate |   When I think of specific cases, China managed to improve their status from low wage exploitative trade to be a huge global market with their size. However several african countries find it hard to develop despite having open trade. South America might hold interesting cases...  
> **username_1**: This research (1958) goes further on the topic: http://www.depfe.unam.mx/doctorado/teorias-crecimiento-desarrollo/myint_1958.pdf  

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### Answer by username_2 on 2017-08-14. Score: 2

Free trade in theory allows for a greater division of labor by allowing countries as a whole to specialize rather than a section of each country specializing. In theory this should make every country involved wealthier as they can focus on doing more of what they're good at. Its the country level version of division of labor and trading in general.


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