The current paper is devoted to the examination of free trade as one of the most widespread economic policies nowadays. Free trade means the abolition of all restrictions regarding imports and exports of goods and services. Its advocates suggest it to be one of the main sources of rapid economic development in the 19th and 20th centuries while its opponents believe that the government should impose some restrictions in order to promote national interests. It is necessary to evaluate the positions of both sides and formulate adequate conclusions.
The advocates of free trade stress the fact that it contributes to the division of labor and a more sophisticated specialization among different countries and regions. This position is correct as the absence of any restrictions creates the opportunities for mutually beneficial exchange. Therefore, there is no need to produce everything that is possible, and it is reasonable to specialize on those goods and services where the country has comparative advantages. Then, it is possible to exchange those goods where the country has comparative advantages for other ones. As a result, the general well-being of all countries will increase. Thus, the regime of free trade allows realizing the most complicated international projects and increasing the global GDP.
Another important implication of the regime of free trade is that it creates additional opportunities for all countries. Even if a given country has no absolute advantages in the production of any goods and services, it still may be benefited from international exchanges as all countries have comparative advantages in the production of at least some goods. Therefore, free trade is beneficial for both the developed and developing countries. Such countries as Hong Kong and Singapore demonstrate that a free trade may help to achieve the highest rates of economic growth. Moreover, it is one of the basic elements of economic freedom in general.
It is reasonable to examine the idea that government should introduce restrictions on international trade in order to protect national interests. The only group that is benefited from such government initiatives is domestic producers. They receive the opportunity to sell more goods under higher prices. However, the state of all national consumers becomes worse than before as they have to pay higher prices for the goods of lower quality. The overall result is negative, as well, because the losses of consumers are higher than additional benefits of some groups of producers. It also helps to understand why protectionism does not lead to high rates of economic growth in the long run. Isolated countries (such as North Korea) cannot participate in mutually beneficial exchanges with other countries and have to experience a very low level of life.
Thus, it may be concluded that both theoretical considerations and empirical facts demonstrate that a free trade is the most efficient regime in the sphere of international trade. It may be adopted in all countries worldwide and maintained through different international organizations such as the WTO. As all tariffs have a large number of disadvantages, they should be completely removed. In this way, the general standards of living may be maximized.
It should be stressed that the principles of free trade may be completely realized only if the economic life in a given country is comparatively free. For example, the labor market should not be highly regulated in order to contribute to the free movement of goods and the workforce among different countries. Thus, the reforms should be complex, and all elements should not contradict one another. The principles of free trade are relevant today no less than they were 200 years ago. They should be promoted and adopted all over the world.