Free Trade is the policy of permitting the people of a country to buy and sell where they please without restrictions. The term is generally used to describe the conditions of trade between countries, but it may also apply to the conditions of trade within a country. A nation that follows the policy of free trade does not prevent its citizens from buying goods produced in other countries or encourage them to buy at home rather than abroad. (The World Book Encyclopedia 1970), In this essay we will discuss reasons for supporting free trade along with those who are opposed to free trade.

Some of the benefits of free trade is that it improves productive efficiency and increases consumer choice. The economic theory of comparative advantage also provides an indisputable logic behind why two nations that trade are both better off than if they do not trade, however, free trade remains controversial because gains from trade are not evenly distributed within countries. For example, with the outbreak of the coronavirus and China lifting import restrictions on U.S farm goods, this trade will benefit China by removing barriers on these products which would improve and support free trade. Those who favor free trade argue that protection leads to national isolation, national jealousies, and threats of war, which in turn necessitate even greater protection. They believe that free trade leads to understanding and world peace. (World Book Encyclopedia 1970).

Another argument for free trade is that by providing entrepreneurs with an incentive to seek new ways to export or compete with imports, free trade offers more opportunities for learning and innovation than are provided by a system of “managed” trade, where the government largely dictates the pattern of imports and exports. A related form of gains from free trade involves the tendency for more productive firms to engage in exports while less productive firms stay with the domestic market. (Krugman, Obstfeld, Melitz p.238).

According to Wall Street Journal U.S. officials said Chinese leaders have taken the first steps toward implementing the first phase of a trade deal between the world’s two largest economies, an announcement that amid concerns that the coronavirus could delay the pace of China’s promise to purchase more U.S comes. Crops and other goods. Official noted that Chinese leaders have lifted import restrictions on U.S. poultry and poultry products and pet food, along with other actions, since the deal took effect. The deal calls for China to increase its purchases of U.S. agricultural products by $32 billion over a two-year period. (Wall Street Journal Economy Week Ahead). Free trade will be an advantage to China considering the current economic situation with the coronavirus.

Countries possessing an abundance of land relative to labor will tend to specialize in agricultural products, such as the U.S and will export these products for the manufactured goods made by countries having an abundance of labor relative to land. Australia, for example produces wool and mutton because of large land areas and a suitable climate; Canada produces wheat for similar reasons. Countries specialize, therefore in the production of certain goods and exchange a part of their total output for goods made in other countries. International trade is the extension of the principle of the division of work to the international sphere. It is based on international division of labor and specialization.