Why Free Trade

Free Trade – for a more just world!


1. Free trade: a motor of a more humane world

President Trump holds free trade responsible for the loss of jobs. A broad coalition of left-leaning organizations in Europe fears that with free trade the standards for consumer protection might collapse. These are, in fact, distraction tactics to protect privileges of the few. That nowadays all over the world we thrive more than ever in human history is mainly thanks to an increasing liberalization of world trade.

2. Free trade provides peace

As peoples and states are ever closer intertwined by trade relations they are much more unlikely to go into war with each other. Trade increases mutual dependency. Through economic integration opposition against conflict and war grows among the citizens. It is in nobody’s interest to be prevented to sell his goods or to buy goods from others at low prices because of political aggression. Propaganda against the enemy does not work properly anymore if you know him and have a business relationship with him. Growing trade between states, therefore, consistently drives up the price of war. At the same time, wealth grows more rapidly and sustainably through trade than through conquest.

3. Free trade is fair trade

Trade restrictions such as tariffs, but also standards and regulations, provide advantages for a small group of locals over foreigners. Especially the best organized groups deploy their political influence to shelter from competition across the border. In fact, it are often major cooperations and unions that are protecting their privileges through protectionist policies. By contrast, free trade enables every supplier and every consumer to enter the market. It prevents discrimination and gives every market participant a chance irrespective of his origin, gender, opinion or social status.

4. Free trade helps the weak

One of the founders of the social market economy, the economist Franz Böhm, said that competition was “the most ingenious tool of deprivation of power in history”. The same observation applies to free trade. The rich can afford to pay higher prices. However, low-income earners, medium-sized companies, small businesses, and normal citizens are hurt most by trade barriers. They have to pay higher prices and are forced to fund the bounties of the few with their own tax contributions. Everybody must cut back, so aa few can have their advantage. On the other hand, free trade challenges the strong by providing the weak with a chance of catching up – in the own country and all over the world. If you want to break up market power you have to increase competitive pressure through free trade.

5. Free trade strengthens the individual

Adversaries of free trade contend that “our industry” must be protected and “our standards” must be enforced. These notions follow the antiquated “us against them”, the ideas of collectivism and nationalism, which have so often lead our world into disaster. Free trade, by contrast, is blind towards nations, particular industries or any other collective group. Only the smallest unit in the economy matters where free trade prevails: the individual. With free trade, no individual is forced to submit to a greater group. Free trade allows single contract parties to decide which products and services they want to buy or sell. Free trade is a cosmopolitan idea. It is not surprising that the current revival of nationalist ideas presses free trade massively given that it was always a motor of denationalization.

6. Free trade is the best foreign aid

By now it is increasingly accepted that it neither helps to support potentates and bureaucrats in developing country by financial aid nor to destroy local markets by flooding them with relief supplies. The biggest opportunity for poor countries consists in our willingness to open our markets. The fact that since 1990 the part of the world population living in extreme poverty has decreased from 37 to less than 10 percent was largely driven by the worldwide trade liberalization that occurred in this time. Since 2001 the EU has increasingly opened its markets for the about 50 poorest countries in the world. However, there are still plenty obstacles that producers and merchants from these countries must overcome. Regulations and standards get more by the month and render it often impossible to provide products in these parts of the world. This, too, is a part of free trade: abolishing barriers that emerge as a result of small groups imposing their notions on others through laws and regulations.

7. Free trade facilitates more participation

The German politician Ludwig Erhard, the father of post-war Germany’s economic miracle, once said that trying to restrict trade was “pure egoism”. Free trade provides a wide variety of opportunities for people who were until then excluded from wealth and progress in society to benefit from these advantages, too. For some, products and services became more affordable because there was a wider supply and more competition. For others, it was easier to earn money by developing new markets. As a result, resources were unleashed that now could be brought to a different use: In an industrialized state, someone can save for a sustainable investment, whereas in a developing country somebody can now acquire the financial means to fund his childrens’ education. Then, wealth and progress are not any more the privilege of a small group but are accessible for everyone.

8. Free trade promotes prosperity

By abolishing trade barriers, completely new possibilities emerge to combine work force, talent, and resources. The easier it gets to cooperate with others across borders the faster innovations can come about. More and better products are developed at lower prices. New markets open up and new jobs are created. In the process, not only the number of products increases but also their quality improves. People from developed countries already have high standards with regards to pressing issues such as humane labor conditions and environmentally friendly production methods. If western markets are also open to suppliers from developing countries, then the developing world has also the incentives to comply with these standards. Such consumers’ pressure can contribute more effectively and accurately to improve labor and environment conditions in developing countries than any program of an international organization.

9. Free trade is a process of progress

Abolishing trade barriers has always been a path of trial and tribulation. The first free trade agreement was concluded between Great Britain and France in 1860, inspired by Richard Cobden. It did not get rid of all tariffs and barriers at once but whittled them away over time. Also in our times, it is not about all or nothing, but rather about reducing trade barriers constantly. Of course, in this process making compromises is inevitable. Every trade treaty and WTO agreement has flaws. But every step towards freer trade is important. And fortunately, our democratic institutions allow us to learn from mistakes so that we can conclude ever better agreements. The history of globalization bears witness that these many small steps into the right direction are part of a process of progress that benefits everyone in the end.

10. Take to the street for free trade!

In the 19th century a mass movement for free trade arose – first in Great Britain, then throughout all of Europe. Above all, common people took to the street. Workers and small business people were protesting tariffs and trade barriers. Whoever wants to restrict the power of small interest groups today; who wants to create new opportunities for the poor here and in all the world; who wants to do something about nationalism, xenophobia and conflicts – must rally for free trade. Ending isolationism, not only through tariffs and subsidies, but also through regulations and standards, can improve this world. We are talking about crucial milestones on the path towards that world which Richard Cobden dreamt of when 170 years ago he called out to the fellows of his free trade movement: “I see in the free trade principle that which shall act on the moral world as the principle of gravitation in the universe, – drawing men together, thrusting aside the antagonism of race, and creed, and language, and uniting us in the bonds of eternal peace … when man becomes one family, and freely exchanges the fruits of his labour with his brother man.