“Free Trade Agreements” are Anything But

I am sorry to say, but anyone who believes governments create “free” trade with such agreements is effectively openly acknowledging that they know nothing at all about basic economics.

So-called “free trade agreements” are fraught with tariffs (i.e., taxes, otherwise known as property confiscation), deficits and surpluses, de facto and/or de jure subsidies, and other elements which only state-wielded force (or its threatened use) can sustain.  None of these factors are consistent with a free market, of course, and consequently all are antithetical to actual free trade.

This general subject is increasingly relevant as last week the Trump Administration reportedly “rejected” Germany’s appeals to “emphasize the importance of free trade” at the most recent G-20 meetings.  Whether or not it is a good idea to put “America first” in any such supposed “free trade” agreement(s) is basically a red herring, as all such agreements are inherently restrictive to actual free exchange of goods and services.  In point of fact, free trade is what occurs in the absence of state intervention.

As a particularly relevant example, the heralded (in some circles) North American Free Trade Agreement (NAFTA) provides for seemingly silly exceptions to the “no less favorable treatment” provision and prohibitions on import/export restrictions between parties (Articles 301 and 309) for Canadian policies, including exports of “logs of all species” and “unprocessed fish,” “preferential rates for certain freight traffic,” “excise taxes on absolute alcohol used in manufacturing,” and “quantitative import restrictions on goods that originate in the territory of the United States,” among many others.

Mexico similarly enjoys the right to prohibit or restrict importations of “gasoline engines of more 1,000 cm3, except for motorcycles,” “distributors fitted with a measuring device even if it includes a totalizing mechanism,” “mobile portals on tires and straddle carriers,” “bicycles, other than of the type for racing,” and other such highly specific goods (and many, many of them).

To roundly highlight some examples, America’s specific exception extends to “taxes on imported perfume containing distilled spirits.”  (Shockingly – not really – the enumerated exemptions provided for the United States are substantially fewer than its counterparts.)

These very specific exceptions have nothing at all to do with special interest corporate/industry lobbying and consequent protectionism, I am sure – and these are just some examples from a cursory review.

When governments bemoan potential policies that are “anti-free trade” or urge the continued existence of such arrangements, they are really just endorsing interventionism and protectionist postures, neither of which have anything at all to do with genuinely free trade.

Truly free interactions, by definition, take place in the absence of aggressive and/or violent coercion.  Consequently, any statist “agreement” or treaty which does anything more (or less) than enforcing such contracts or redressing fraud does not accurately meet the criteria for enabling “free” trade.  If we are going to have a substantively meaningful discussion regarding global economics and trade, we must at least reject this disingenuous newspeak and endeavor to understand what is really going on in this globalist/interventionist (i.e., non-capitalist) economy.

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