Free trade is a trade policy

February 27, 2019 Critical Thinking

Free trade is a trade policy, which does not provides any restrictions towards the imports into and exports out of a country. This is a general idea of free market as applied to International trade. This is an agreement between 2 or more countries who agrees to remove / reduce the trade barriers such as – tariffs, quotas and other preferential trade barriers to be imposed on the goods and services traded between them. Free trade policy generally promotes following features:
• Trade of goods without taxes (including tariffs) or other trade barriers (e.g., quotas on imports or subsidies for producers)
• Trade in services without taxes or other trade barriers
• The absence of “trade-distorting” policies (such as taxes, subsidies, regulations, or laws) that give some firms, households, or factors of production an advantage over others
• Unregulated access to markets
• Unregulated access to market information
• Inability of firms to distort markets through government-imposed monopoly or oligopoly power
• Trade agreements which encourage free trade.

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