Commerce , originating in the Latin word commercium, is a term that refers to the purchase and sale of services and / or products . Free , meanwhile, it is an adjective that can refer to what is Independent since it is not subordinate to an authority or a superior.
The idea of free trade It is used in the field of economy to mention the absence of obstacles or barriers that prevent access to commercial activity and its development . It is one of the pillars of economic liberalism .
For free trade, the State You do not have to intervene in the commercial activity. Nor should conditions be imposed by unions, unions or employers' organizations. Its essence is based on the fact that it is the merchants themselves who set the rules through the operation of the market.
Free trade appears both in domestic and foreign trade. According to the principles of this principle, there should be no tariffs, quotas, price controls, etc. Therefore free trade opposes protectionism .
When a free trade Area , in this framework, the countries signing the agreement cancel all border tariffs. This means that the prices of goods are the same for all members of the free trade zone.
For free trade advocates, in short, regulations and restrictions undermine voluntary exchange and affect economic development. That is why they demand the liberalization of markets as a guarantee of respect for individual rights and as a path to progress.
The history of free trade takes us to the 18th century, when its origins were glimpsed in opposition to mercantilism , a set of extremely pragmatic ideas in favor of the State intervening in the economy predominantly. Proponents of a new form of commerce believed that anyone had the right to exchange their properties with individuals from any region or country in the world.
As mentioned in previous paragraphs, the presence of tariffs opposes the principles of free trade, as well as any other barriers, such as import quotas, subsidies for the producer, obstacles to administration and taxes on services related.
The so-called "policies of distortion of the market "are other characteristics that must be eliminated to give way to free trade as they give certain producer groups an advantage over others through subsidies, taxes that are too high for competition and other unfair measures.
Free trade is not something we can appreciate in the real world very often. We are much more accustomed to suffering the monopolistic tactics of certain multinational companies, for example. Even markets that at first seem to support freedom tend to surprise us negatively with terms abusive throughout his career.
This is related to the existence of certain free trade contracts that, in the long term, create obstacles in the market for not responding to the principles set forth above one hundred percent. There are also detractors of free trade who consider it a tactic to favor interests from multinational companies and not all merchants.
The level of complexity to which this topic is raised in international debates seems really excessive, since after certain sessions the idea of free trade seems to become something negative and restrictive. For example, there are those who say it is not beneficial for first world countries and doubt its effectiveness in third world countries.