Commerce , originating from the Latin word commercium , is a term that refers to the purchase and sale of services and/or products . Free , meanwhile, is an adjective that can refer to that which is independent since it is not subordinated to an authority or a superior.
The idea of free trade is used in the field of economics to refer to the absence of obstacles or barriers that make access to commercial activity and its development impossible . It is one of the pillars of economic liberalism .
For there to be free trade, the State does not have to intervene in commercial activity. Nor should unions, unions or employers' organizations impose conditions. Its essence is based on the traders themselves setting the rules through the operation of the market.
Free trade appears in both domestic trade and foreign trade . According to the postulates of this principle, tariffs, quotas, price controls, etc. do not have to exist. Therefore free trade is opposed to protectionism .
When a free trade zone is established, in this framework, the countries that sign the agreement cancel all border tariffs. This means that the prices of goods are the same for all members of the free trade zone.
For defenders of free trade, in short, regulations and restrictions undermine voluntary exchange and affect economic development. That is why they demand the liberalization of markets as a guarantee of respect for individual rights and as a path to progress.
The history of free trade takes us to the 18th century, when its origins were glimpsed in opposition to mercantilism , a set of extremely pragmatic ideas in favor of the State intervening in the economy predominantly. Proponents of a new form of trade believed that anyone had the right to exchange their property with individuals from any region or country in the entire world.
As mentioned in previous paragraphs, the presence of tariffs opposes the principles of free trade, as well as any other barrier, such as import quotas, subsidies for the producer, obstacles in administration and taxes on related services .
The so-called "market distortion policies" are other features that must be eliminated to make way for free trade since they give certain producer groups an advantage over others through subsidies, taxes that are too high for competition and other measures. unfair.
Free trade is not something we see in the real world very often. We are much more accustomed to suffering from the monopolistic tactics of certain multinational companies, for example. Even markets that at first seem to support freedom often surprise us negatively with abusive conditions throughout their history.
This is related to the existence of certain free trade contracts that, in the long term, create obstacles in the market because they do not respond one hundred percent to the principles stated above. There are also detractors of free trade who consider it a tactic to favor the interests of multinational companies and not all merchants.
The level of complexity to which this issue is raised in international debates seems really excessive, since after certain sessions the idea of free trade seems to become something negative and restrictive. For example, there are those who say that it is not beneficial for first world countries and doubt its effectiveness in third world countries.