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Critical review of free trade debates

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  1. Introduction
  2. Robert E. Maxwell's analysis of the historical evolution
    1. Early foreign trade doctrines
  3. Anne Krueger's view
    1. Her two questions for the WTO
    2. The division of her speech into 8 sections
    3. The two principle motives that continue to drive opposition to trade liberalization
    4. Evidence showing that free trade was beneficial
    5. Why governments promote protectionist policies
  4. Eeakness in Krueger's argument
  5. Conclusion

George Grantham, a professor of economics at McGill University, used examples from manorial England to show that the Ricardian concept of comparative advantage through free trade was not applicable during the pre-industrial period. According to the author, the English economy was characterized by wide fluctuations in output and lack of diminishing returns to capital (land) and labor. He stated that technology had not evolved to improve productivity. As a result, the gains from farming, herding, and other ?economic enterprise? varied greatly depending upon weather, disease, and other factors. In many instances, people were geographically dispersed, so the concept of ?congestion of capital? didn't apply. Additionally, the market for goods wasn't developed because of the lack of clear transportation/trade routes.

[...] To make her arguments more palatable to free trade skeptics, she has to provide stronger quantitative evidence of the benefits of eliminating trade restrictions. Additionally, variations in access to resources, culture, geography, and infrastructure have to be considered when discussing and analyzing the impact of trade liberalization on different nations, and the time it takes to realize any gains. Palmeter, David. (2005). A note on the ethics of free trade. World Trade Review, 449-467. David Palmeter, legal counsel and advisor to entities involved with the World Trade Organization drafted an essay designed to provide theoretical evidence that free trade was both a sound economic and ethical policy for governments to implement. [...]

[...] As the world's largest consumer market, America has been a large proponent of free trade - there is a constant demand for goods and services. I believe that America's long term economic prosperity is the direct result of increased productivity from technology, not necessarily the reduction of trade barriers because the nation has always engaged in high levels of trade. In 1994, America enacted a free trade agreement with Mexico and Canada called NAFTA. The nation also enjoyed a huge economic boom in the 1990s. [...]

[...] She also asked why free trade opponents have been so successful. The historical answer has remained with the lobbying efforts of special interest groups. The agricultural lobby, for example, was strong in 19th century England when the Corn Laws were at the center of debate. Today, agricultural protection has maintained a significant presence in both developed and developing nations, at considerable costs to labor in the form of jobs and to consumers in the form of unnecessarily higher prices. Additionally, economic prosperity has often been attributed to sources other than trade like improved productivity from technological innovations. [...]

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