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Free Trade Under Fire

Free Trade Under Fire: Third Edition

Copyright Date: 2009
Pages: 330
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  • Book Info
    Free Trade Under Fire
    Book Description:

    Growing international trade has helped lift living standards around the world, and yet free trade is always under attack. Critics complain that trade forces painful economic adjustments, such as plant closings and layoffs of workers, and charge that the World Trade Organization serves the interests of corporations, undercuts domestic environmental regulations, and erodes America's sovereignty. Why has global trade become so controversial? Does free trade deserve its bad reputation?

    InFree Trade under Fire, Douglas Irwin sweeps aside the misconceptions that litter the debate over trade and gives the reader a clear understanding of the issues involved. This third edition has been thoroughly updated to include the latest developments in world trade--including the practice of off-shoring services, the impact of trade on wages, and the implications of trade with China-based on the latest research.

    eISBN: 978-1-4008-3095-4
    Subjects: Economics

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Figures
    (pp. ix-x)
  4. List of Tables
    (pp. xi-xii)
  5. Preface
    (pp. xiii-xiv)
  6. Introduction
    (pp. 1-7)

    Nearly two centuries after Macaulay made it, this observation by one of Britain’s great historians still rings true. Growing world trade has helped lift standards of living around the world, and yet today, as in Macaulay’s time, free trade does not win many popularity contests. Indeed, public opinion surveys in the United States and Europe reveal increasing skepticism about the benefits of international trade and trade agreements. Trade policy remains a highly controversial subject, a source of never-ending public debate.

    In almost every country, international trade brings out anxieties and insecurities. With each passing decade, some of the old fears...

  7. 1 The United States in a New Global Economy?
    (pp. 8-27)

    International trade has become an integral part of the U.S. economy over the past few decades. The United States imports electronics from China, apparel from Mexico, oil from Saudi Arabia, and steel from Korea, and exports aircraft from Washington, wheat from Kansas, software from California, and machinery from Illinois. The United States sells financial and information-technology services to customers around the world and buys data entry, software programming, and call center services from India. There is hardly a sector of the economy or a region of the country that is unaffected by international markets. As the twenty-first century begins, the...

  8. 2 The Case for Free Trade: Old Theories, New Evidence
    (pp. 28-69)

    For more than two centuries, economists have pointed out the benefits of free trade and the costs of trade restrictions. As Adam Smith argued more than two centuries ago, “All commerce that is carried on betwixt any two countries must necessarily be advantageous to both,” and therefore “all duties, customs, and excise [on imports] should be abolished, and free commerce and liberty of exchange should be allowed with all nations.”¹ The economic case for free trade, however, is not based on outdated theories in musty old books. The classic insights into the nature of economic exchange between countries have been...

  9. 3 Protectionism: Economic Costs, Political Benefits?
    (pp. 70-104)

    Economic analysis has long established free trade as a desirable economic policy. This conclusion has been reinforced by mounting empirical evidence on the benefits of trade, and yet protectionism is far from vanquished in the policy arena. Of course, this is nothing new: as Adam Smith observed more than two hundred years ago, “not only the prejudices of the public, but what is much more unconquerable, the private interests of many individuals, irresistibly oppose” free trade.¹ Indeed, interest groups opposed to free trade often have a political influence that is disproportionate to their economic size. This chapter describes the economic...

  10. 4 Trade, Jobs, and Income Distribution
    (pp. 105-145)

    The argument against free trade that resonates most strongly with the public and with politicians is that imports destroy jobs. Indeed, the greatest fear about international trade in general, and imports in particular, is that it can harm workers, reduce wages, and lead to unemployment. But is this an accurate view of trade as a whole? And if so, are import restrictions the remedy? This chapter addresses the relationship between trade, jobs, and wages, and examines government policies to assist displaced workers. The chapter also considers the underlying causes of trade deficits to see if a country suffers when it...

  11. 5 Relief from Foreign Competition: Antidumping and the Escape Clause
    (pp. 146-175)

    We have seen how trade policies aimed at reducing imports also reduce exports and employment elsewhere in the economy. Yet import restrictions are often justified as a way of providing relief to industries suffering from “unfair” foreign competition. Antidumping laws, which provide a means for tariffs on unfairly low-priced imports, have become the primary instrument for addressing such concerns. This chapter examines the U.S. antidumping laws and asks whether they provide a remedy for unfair trade, or are merely a convenient mechanism for protecting an industry from imports. We will also look at the escape clause procedure, which can provide...

  12. 6 Developing Countries and Open Markets
    (pp. 176-218)

    Previous chapters have described the benefits of free trade and the costs of import protection, but many observers are skeptical that open trade policies can improve conditions in poor countries where a majority of the world’s population live. This chapter examines whether the case for free trade is qualified by the special circumstances of developing countries. Recent experience suggests that developing countries can reap substantial benefits from adopting more open trade policies, but that such policies alone do not guarantee development, particularly when corruption, civil conflict, excessive regulation, and other institutional failings prevent local entrepreneurs from taking advantage of world...

  13. 7 The World Trading System: The WTO, Trade Disputes, and Regional Agreements
    (pp. 219-269)

    For more than sixty years, the General Agreement on Tariffs and Trade (GATT) has provided a system of world trade rules under which international trade has flourished. In 1994, the Uruguay Round of trade negotiations produced sweeping agreements to liberalize trade in agriculture and apparel and to extend trade rules to new areas such as services, investment, and intellectual property. In addition, the World Trade Organization (WTO) was established as a formal multilateral institution with stronger procedures for resolving disputes than in the GATT. While the GATT had a rather quiet existence, the WTO has proven very controversial. This chapter...

  14. Conclusion
    (pp. 270-278)

    In a recent speech at Dartmouth College, former senator George Mitchell said that he had drawn two conclusions from his role as mediator in the conflict in Northern Ireland: that economic opportunity is a prerequisite for peace, and that America’s vision of that economic opportunity is the basis of its influence in the world.

    These simple lessons have some connection to trade policy. For nearly three-quarters of a century, the United States has nurtured a rules-based world trading system centered on the principle of nondiscrimination and the goal of gradually reducing trade barriers. The United States is admired around the...

  15. References
    (pp. 279-306)
  16. Index
    (pp. 307-313)