3.5.4 Free Trade and Globalisation

Free trade and globalisation have brought many benefits to the whole world, but their impact has sometimes been painful

Free trade is defined in this book as countries’ ability to sell goods and services to each other without restrictions or the imposition of tariffs.  The World Trade Organisation (WTO) is the forum which was set up in 1994 to host negotiations on the freeing of world-wide trade.  It describes itself on its website as “the international organization whose primary purpose is to open trade for the benefit of all”.  It prevents countries from setting new tariffs that exceed agreed limits, or from banning imports – although it does allow exceptions on grounds of national security and health.  It has ruled on numerous trade disputes, as in examples listed in the BBC Timeline: World Trade Organization.

Despite the agreements reached in the WTO, free trade remains a contested issue.  The article, Why did The Economist favour free trade?, explained why that magazine is an enthusiastic advocate for it – but other voices bewail the changes wrought by globalisation (3.4.2): the resulting movement of jobs.  Many accept the argument that free trade has brought unprecedented prosperity to the world, yet they argue for some industries to be ‘protected’.

Recent political friction between the major powers, as described later (, has inhibited free trade.  Western economic sanctions, imposed in response to Russia’s invasion of Ukraine, have led to ‘reverse globalisation’: “Russia spent three decades integrating itself into the global economy. The repercussions of President Vladimir Putin’s invasion of Ukraine are winding the clock back in a matter of weeks. It’s a real-time test of how a nation copes when Western technology, capital and consumer goods are suddenly cut off.”  This is a use of economic power for political and security reasons, with a price to be paid in reduced prosperity both in Russia and in the rest of the world.

The following sub-sections describe different aspects of international trade relations:

●  Free trade has raised living standards all over the world ( More work needs to be done, though, to reduce public scepticism about the benefits to consumers.

●  People often argue for government intervention to protect particular industries (  Protectionist measures can be politically popular but they reduce prosperity for most people.

●  Competition from low-cost countries can be deemed ‘unfair’ if low prices are achieved through exploiting the workforce or harming the environment (  Buyers can demand higher standards, though.

●  Globalisation has some disadvantages.  Wealthy countries can lose some highly-paid jobs, for example, but these pressures can be offset by raising productivity and setting minimum wage levels (

●  Countries wanting to increase business flows between them can make specific trade agreements or alliances with shared interests (  These may be affected by political and security considerations.



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This page is intended to form part of Edition 4 of the Patterns of Power series of books.  An archived copy of it is held at https://www.patternsofpower.org/edition04/354a.htm