Trade is the exchange of goods or services, and international trade is the same when it crosses international borders. Trade across borders traditionally has been subject to trade barriers such as quotas, taxes, tariffs and duties. Modern trade theory rests on two key platforms. The first is Ricardian trade theory, based on comparative advantage, where both parties in a trading arrangement can enjoy a higher net level of trade if they concentrate on producing that in which they have a comparative advantage and trade freely among themselves. This theory has given rise to modern trade theory, which emphasizes this type of resource allocation in production, twinned with barrier-free trade. In practice, "free" trade seldom exists, but freer trade is pursued actively by most nations, operating with the framework of bi- and multi-lateral trade agreements, including those negotiated under the auspices of the World Trade Organization.
Free trade is...
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