Trade between nations has the potential to benefit all participating countries (albeit to differing extents). This chapter explains why.
Totally free trade, however, may bring problems to countries or to groups of people within those countries. Many people argue strongly for restrictions on trade. Textile workers see their jobs threatened by cheap imported cloth. Car manufacturers worry about falling sales as customers switch to Japanese models or other east Asian ones. But are people justified in fearing international competition, or are they merely trying to protect some vested interest at the expense of everyone else? Section 11.2 examines the arguments for restricting trade.
If there are conflicting views as to whether we should have more or less trade, what has been happening on the world stage? Section 11.3 looks at the various moves towards making trade freer and at the obstacles that have been met.
A step on the road to freer trade is for countries to enter free-trade agreements with just a limited number of other countries. Examples include the EU and the North American Free Trade Association, NAFTA (the USA, Canada and Mexico). We consider such ‘preferential trading systems’ in Section 11.4. Then, in Section 11.5, we look at probably the world’s most famous preferential trading system, the European Union, and, in particular, at the development of a ‘single European market’.
Finally we turn to examine the role of trade for developing countries. Does trade with the rich world help them to develop, or does it merely result in them being dominated by rich countries and giant multinational companies?
