On January 27, 2017 , the Liberty Discussion members discussed on the article ‘Is Free Trade Really Free? Why Protectionism Is Alive and Well‘ by Robert Britton.
The participants mainly argued on how “free trade” per se does not exist. Although provisions of minimum tariffs for trading across countries exist, the measures for quarantine act as barriers for export, especially from developing countries. Difficulties in getting labor permits/work visas also act against free mobility. The discussion went on further with role of state subsidy and its impact on innovation. Participants reflected upon the cases of protectionism and political interference in such motions.
On exchanging views on role of World Trade Organization (WTO) in promoting free trade, the provision of low tariff rates for Less Developed Countries (LDCs) has contributed on lowering the barriers. However, the developed countries, despite the anti-dumping laws, default as there are no major consequences.
Debating on protectionism, participants shared that it is necessary for the growth of emerging new economies in the home country. This was countered with the argument that every country has its comparative advantage which it could use in order to be more competitive in the market. Hence, the protectionism for protecting anti-competitive businesses is a waste of effort and resources.
The state subsidy is necessary for Research and Development when it comes to sectors such as pharmaceuticals and energy development. This could be viewed as incubation fund to motivate private sectors or run state owned enterprises. The argument was countered as the funding for subsidy comes from taxpayers’ money and the move cannot be completely justified as taxpayers usually have no say. Plus, there are multiple organizations offering incubation fund to start enterprises.
After discussing for an hour and half on free trade and protectionism, the participants concluded that instances of protectionism acts as barrier to free trade.