Chapter 8 - Trade policy: Past, present and future. After studying this chapter you will be able to: Use historical examples to illustrate how economic, social, and political factors determine trade policies; relate historical trends in trade policies to changes in economic, social, and political factors; show that there is no clear historical trend towards free trade; periods of free trade have been followed by periods of restricted trade, and vice versa;. | Trade Policy: Past, Present, and Future When tariff reduction has occurred, it has been by negotiation. We will reduce our tariffs if you will reduce yours. From the economist’s point of view, it is rather like my offering to stop hitting myself on the head with a hammer if you agree to stop hitting yourself on the head with a hammer. (David Friedman) The Goals of This Chapter Use historical examples to illustrate how economic, social, and political factors determine trade policies. Relate historical trends in trade policies to changes in economic, social, and political factors. Show that there is no clear historical trend towards free trade; periods of free trade have been followed by periods of restricted trade, and vice versa. Provide detailed information on the GATT, the World Trade Organization, and the other institutions that guide the trade policies of individual countries today. Encourage students to use the examples of history to help them set their expectations about how trade policy is likely to evolve in the future. The Ups and Downs of Trade Policy The world has meandered through periods of increasing globalization as well as periods of increasing isolation. 2,000 years ago during the time of the Roman Empire, trade was free throughout the Mediterranean region. After the fall of the Roman Empire, Europe fragmented into separate, isolated nations characterized by feudalism. During the Renaissance, Europe began to open again to trade and foreign technology. Europe embraced free trade during the 1800s, but was quick to suppress trade during the early 20th century. Only in the latter half of the 20th century did Europe again expand trade and seek globalization. The Ups and Downs of Trade Policy The Middle East remained open to outside influences after the fall of Roman Empire. More than 1,000 years ago, Middle Eastern Muslim states were noted for their trade and technological development. China also reached its technological apex during the Sung dynasty . | Trade Policy: Past, Present, and Future When tariff reduction has occurred, it has been by negotiation. We will reduce our tariffs if you will reduce yours. From the economist’s point of view, it is rather like my offering to stop hitting myself on the head with a hammer if you agree to stop hitting yourself on the head with a hammer. (David Friedman) The Goals of This Chapter Use historical examples to illustrate how economic, social, and political factors determine trade policies. Relate historical trends in trade policies to changes in economic, social, and political factors. Show that there is no clear historical trend towards free trade; periods of free trade have been followed by periods of restricted trade, and vice versa. Provide detailed information on the GATT, the World Trade Organization, and the other institutions that guide the trade policies of individual countries today. Encourage students to use the examples of history to help them set their expectations about how .
