What is Free Trade?

Free trade refers to the removal of restrictions and obstacles on import and export trade by the country, the abolition of various privileges and preferences for the import and export of goods in the country, the free import and export of goods, and free competition in domestic and foreign markets. Free trade is the symmetry of "protective trade." The state does not interfere in import and export trade, does not impose restrictions, and allows goods to be imported and exported freely.

free trade

Free trade refers to the removal of restrictions and obstacles on import and export trade by the country, the abolition of various privileges and preferences for the import and export of goods in the country, the free import and export of goods, and free competition in domestic and foreign markets. Free trade is the symmetry of "protective trade." The state does not interfere in import and export trade, does not impose restrictions, and allows goods to be imported and exported freely.

Free trade

In the 16th century, mercantilism, which was opposed to free trade, began to develop on the European continent and still exists in different forms to this day. The earliest free trade critics of mercantilism were

The rapid development of free trade has increased the role of legitimacy and other factors in the determination of national interests, promoted the certification of national interests from closed to open, and caused the basic content of national interests to change.

1. The interests of cooperation between countries are increasingly prominent

Adam Smith believes that, even if everyone is pursuing the realization of self-interest, the harmony of interests is real, and what makes it happen is the so-called "rational arrangement." He believes that individuals neither intend to promote the public interest nor know to what extent they have promoted the public interest. He hopes to gain only his own interests, but in the process of seeking self-interest, as in many other cases, he is guided by an invisible hand, which promotes the realization of public goals that are not included in his original intention . Furthermore, Edward Carr points out that these principles that explain individual behavior are also applied to the state. Along this line of thinking, we can see that the rapid development of free trade has prompted the country to consider the importance of general interests in the formulation of agendas and rules, and the international significance of national interests has increased significantly.

In an era of increasing openness, international trade activities have strengthened the interdependence between nations, and the protection of the interests of cooperation among nations has become the proper meaning of national interests. The economic development of one country is no longer premised on the damage or backwardness of other countries, but on the basis of the common development of both sides. While focusing on their own interests, each country also needs to take into account the actual interests and legitimate concerns of other countries, and based on the combination of its own interests and the interests of other countries, effectively formulate foreign policies and handle international affairs flexibly. It is difficult for even large and powerful countries to ignore the interests of small and medium-sized countries, and cooperation between countries is increasingly needed. Only when a country implements an open strategy of mutual benefit and win-win will it be able to better serve the country's development strategy and its benefits can be increased to a greater extent.

The ever-increasing unification of international trade rules objectively requires that countries continually expand the convergence point of common interests. After World War II, the coordination of bilateral trade policies and regional policy coordination, especially the multilateral trade policies that are committed to the international trading system, have led to the unification of trade policies in various countries, reflecting the orderlyness of global economic relations, Brings great benefits. The strengthening of international trade rules highlights the restrictive role of the international trading environment on national interests, and puts forward higher requirements for "sovereign transfer", that is, the integration of sovereign states into the free trade process must actively (not passively) accept external restrictions and be conscious Organically integrate self-interest with the interests of other countries. If a country fails to clearly understand and grasp the rules of international trade and its international status, it is sometimes impossible to accurately judge its own interests and needs.

The development of free trade has affected the relationship between national interests and international obligations. The formation of the multilateral (or bilateral) trading system has put forward new requirements for the certification of a country's interests, that is, the actual scope of national interests must be as close as possible to the performance of international obligations. As Joseph Nai pointed out, "The redefinition of national interest is actually determined by internationally accepted norms and values. These norms and values constitute and give meaning to international life. In short, the institutionalization and Universalization has brought new levels of interest to the country. "In the era of free trade, if a country does not attach importance to the legitimacy of its own interests, or even deviates from universal international trade rules, then it is easy to go to two extremes: one is excessive "Radical nationalism" that favors national interests without regard to the interests of other countries; second, "hegemonism" that regards the pursuit of its national interests as the universal interest of the world and interferes with other countries.

The development of free trade highlights the importance of global interests. While free trade has brought general benefits to related countries, it has also triggered some negative effects. It can be said that, in connection with the rapid development of free trade, some global economic issues such as population, food, energy, water resources, and the ecological environment have become increasingly prominent and become obstacles affecting the sustainable development of the world economy. The solution of these problems requires the concerted efforts and close coordination of all countries in the world to raise the claims and maintenance of national interests to the global level.

In short, how to understand the complex relationship between the particularity and universality of national interests, and how to handle the complex relationship between relative and absolute returns, has become an important issue in defining national interests in the era of free trade.

2. The internal and external lines of national interests are becoming increasingly blurred

The traditional view of national interests holds that national interests are the norm for dealing with relations between nations, and are sacred and inviolable. Never allow others to possess, share and infringe. However, with the development of free trade, the power of the state to manage the market has been eroded, especially by the abnormal behavior of the financial and currency markets. Global issues, multinational corporations, and international organizations are impacting traditional views of national interests, which has blurred the internal and external lines of national interests.

Free trade can bring huge profits to some countries as well as huge costs to others. In the eyes of some, the meaning of national interest may include the following: available work, stored goods, reliable communications, adequate medical care, merchandising, efficient public transport, and a social safety net. For others, the meaning of national interest may include the following: affordable credit, laissez-faire controls, lower taxes, and changing working rules. In other words, the government of a nation-state alone cannot meet the above-mentioned needs. Therefore, every policy that takes the definition and distribution of public goods within the scope of the country's economy as a direct guide must necessarily be tested by the market. Although the government may take some restrictive measures, it cannot prevent more citizens from participating in the evaluation of the effectiveness of national interests.

Some market liberals point out that national borders have become less and less important to the behavior and organization of economic activity. They focus on the growth of free trade, the ability to escape political rules and state power through cross-border cooperation, and the exemption of capital from countries and territories. Fierce international competition has greatly accelerated the process of averaging profits, leading to the era of small profits. The benefits of international trade at the spatial level have gradually narrowed. The trade benefits at the time level and the industrial chain level have become the main goals pursued by traders. Of course, this view will naturally provoke strong opposition from nationalists. From a nationalist perspective, national interest is almost impossible to define as a network of connections that allows different parts of a country to be geographically and culturally world-wide. Very different places connected together.

This shows that the rapid development of free trade has put forward new requirements for the way to understand the spatial scope of national interests.

3. Significant changes in the basic composition of national interests

In today's era, free trade has broken many traditional boundaries (international and domestic boundaries, political and economic boundaries, etc.), resulting in a more variable basic composition of national interests. It can be said that the intersection of economic and political interests, the integration of security interests and development interests, and the integration of other interests at the level of soft power, more specifically reflect the changes in the basic composition of national interests under free trade conditions.

Free trade promotes the status of economic interests in national interests. In order to occupy a favorable position in current and future international competition, all countries in the world are consciously and actively adjusting their economic structures and economic policies. Generally speaking, free trade highlights the important role of economic interests in national interests, mainly as follows: the maintenance of economic interests has become the leading factor in foreign policies of various countries; economic security has begun to be incorporated into national security strategies; economic means has become a solution to international politics An important approach to the problem; economic diplomacy has become an important part of the diplomatic work of all countries. The development of economic and trade relations has become an indispensable part of the economic development of various countries, and it is also one of the important goals in the foreign relations of countries around the world. Many countries have used geopolitical, ethnic, and religious relations as ties to actively carry out economic exchanges and cooperation, and seek and open up channels for economic and trade relations.

Free trade highlights the impact of technological factors on national interests. Since the 1990s, trade liberalization has continued to develop in the direction of information and networking. For participating countries, international information networks can reduce trade costs and barriers to market entry. With the closer integration of science and technology and economy, the status of science and technology in comprehensive national strength has been continuously improved. To this end, countries are racing to adjust their science and technology strategies and policies in order to adapt to the development of the knowledge economy and strengthen national strength, so that science and technology can become a guide for a country to safeguard its own interests.

Free trade has strengthened the impact of mutual interest groups on national interests. The profits that free trade brings to various domestic interest groups are not the same, which directly affects their awareness of the overall national interests, and then affects their tendency to international trade policies. In contrast, groups that benefit more from international trade tend to support free trade, and groups that benefit less or lose their interests often support protection trade. The game between the two interest groups mentioned above makes the national interest more integrated. Therefore, in the era of free trade, the interaction between domestic interest groups has become more and more obvious for the integration of national interests.

4. Unconditional free trade hurts national interests

How does unconditional free trade affect the national interests of a country? With the three basic models of free trade, we can answer the above questions intuitively.

In the 2.2 (two countries, two products) model, two countries that are required to trade with each other specialize in the production of one product with absolute or comparative advantage, and abandon the production of another product with no advantage.

The international division of labor based on this trade theory will inevitably lead to the incompleteness of economic sectors in all countries. If this sector, this industry is exactly the lifeblood of the country, it will endanger national security. If complete free trade is implemented, the disadvantaged industries of a country will be severely damaged, and even an economic sector and an industry will be destroyed.

In the 2 · 2 · 2 (two countries, two products, two resources) model, the two countries that are required to trade with each other specialize in producing more products that occupy their own rich and cheap resources, while producing less or not producing more Products that often occupy scarce and expensive resources in the country. The international division of labor according to this trade theory will inevitably lead to the depletion of certain resources, destruction of land resources, and environmental degradation, which will seriously affect the sustainable development of this country and even the entire world.

In the 2.2.2.2 model (two countries, two products, two resources, two currencies), two countries that require mutual trade are required to implement a free currency exchange system to accommodate free trade. The free exchange of currency accompanied by the marketization of interest rates and exchange rates requires a sound financial system.

If a country's financial system is fragile, unconditional free trade is likely to trigger a financial crisis and even cause a serious economic crisis.

In fact, one of the main reasons why free trade theory fails to accurately explain the law of occurrence and operation of free trade is that it unilaterally exaggerates the unity of the benefits brought by free trade to participating countries, without paying attention to countries under free trade The differences between interests are not fully aware of the damage to national interests caused by unconditional free trade. The terms of trade can directly affect the distribution of trade gains among different countries, which may lead to conflicts of interest between countries. Unconditional free trade will threaten and lay hidden dangers in the security interests of a country's industries, energy, environment and finance.

As free trade has become the most active link in international exchanges and an integral part of the economic development of various countries,

On November 17, 2018, President Xi Jinping met with Chilean President Pinella in Port Moresby. Xi Jinping said that China supports Chile in hosting the 2019 APEC Leaders Informal Meeting to jointly promote the construction of the Asia-Pacific Free Trade Area. ^[2]