Semi-Free Trade

The Age of Mercantilism

I applaud the efforts of Canadian Prime Minister Stephen Harper to promote free trade. Over the course of many months we’ve heard about the Trans-Pacific Partnership (TPP) with the United States and several Asian-Pacific nations. Discussions are ongoing with specific countries or regions, including Europe, India, China and most recently, Japan.

News reports suggest that free trade is a good thing for Canada and for Canadians.  It is indeed, if it is the simple concept of free trade they’re all talking about. Ordinary Canadians however, are distanced from the facts of the “negotiations” surrounding the multiple “free-trade agreements” currently being compiled.

What is it about free trade that is so complicated it must be left to the political power elite to sort out for the rest of us?

Understanding Trade

Most dictionaries inadequately define “trade” in terms of the buying and selling of commodities between or within nations. Also, a trader is defined as someone who trades, such as a merchant or businessman.

Fundamentally, trade involves at least two individuals in an exchange. Each concludes that he is better off. If not, neither would have agreed to the exchange in the first place. It is something every individual does. In fact, all of the rhetoric about free trade at the international level subsumes that there are individuals in each jurisdiction who judge that they would be better off by engaging in trade with other individuals in the expanded market.

 International trade is individual exchange conducted across what are often arbitrary, geopolitical borders. It is this last feature—artificial political barriers to entry—which makes international trade so complex, not the fundamental act of individuals trading values.

Free Trade

So now that we have an understanding of trade, we may examine what “free” trade is. “Free” in this context must mean trade unconstrained by political institutions, since the context is political: i.e. it pertains to relationships among people and their political institutions.

So if free trade is between individuals unconstrained, un-coerced and unregulated by political institutions, then what the hell are Stephen Harper and all the other politicians talking about? Calling it free trade is an error, a misnomer or an outright lie.

What are these “free-trade agreements” referred to by various world leaders? They are copious volumes of rules and regulations, pages of documentation including tariff schedules and other exceptions to unimpeded trade between individuals across political borders.

For example, the highly touted North American Free-Trade Agreement (NAFTA) contains about 2,000 pages of detail, nearly one-half of which are tariff schedules. As liberalizing as NAFTA may have once been for North American commerce, it is wrong to call any part of it “free trade”.

Semi-Free Trade

These international agreements must be called something else, preferably something akin to what they actually represent. “Free-trade agreements” as presently conceived are ambiguous documents and statements however presented. They would more honestly be called managed, supervised, taxed, regulated, allowed, permitted, guided, privileged or perhaps centrally-planned trade. They are certainly not free in any political or economic sense.

“Semi-free” may be the most accurate description; it openly admits that the agreements are subject to change, probably not in favour of political and economic freedom. Or, politicians could save face by just calling them “trade agreements” without any modifier. (In the latter case, the underlying foreign policy of Old World Mercantilism, inherent in the agreements, may take longer to become apparent to the ordinary subject of the empire.)

The Challenge

Genuine free trade would have no taxes or duties between or within jurisdictions and would not be interfered with by regulations which gave preference to one group or another, such as agricultural sectors or other privileged, favoured and protected sectors of an economy.

We may applaud the efforts of Stephen Harper to open up markets abroad and invite the flow of desperately needed capital into Canada. But let’s not dignify the bureaucratic realm of “centrally-planned trade” by allowing it to be called free trade without challenge.

©Copyright 2012 Edward Podritske

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