Thursday, February 14, 2013

Potential US-EU trade deal is managed trade not free trade


Re: US and EU trade deal in the works

Improving trade between the US and the EU is a good thing, especially if it results in a reduction of red tape and tariffs. But note that this is not "free trade" but "managed trade". No negotiations are necessary for a country to have free trade, because it is a decision for that country alone to decide that it will accept goods from anywhere in the world without tariffs, quotas, or other artificial barriers. But this is managed trade that will require reciprocity from one's trading partners. It is analogous to saying that you will not go on a diet and exercise to improve your health unless everyone else does the same. The benefits to free trade are what a nation imports not what it exports. Also note that the commentator said that Europe was asking its industrialists to come forward with their "wish list". What will these industrialists wish for? Let me guess--managed trade that is beneficial to them. Also note that the commentator claims that a strong euro is bad for trade. Nonsense! If this were so, then Zimbabwe would have the best trade policy in the world.

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