Free Trade

Definition

Free trade is an economic policy that promotes international trade without barriers such as tariffs (taxes on imported goods) or quotas (limits on quantities). It aims to increase economic cooperation between countries by allowing goods and services to flow freely across borders.

Related terms

Protectionism: This term refers to policies aimed at protecting domestic industries from foreign competition through measures like tariffs, import quotas, subsidies, or regulations.

Comparative Advantage: This term describes the ability of a country or individual to produce goods or services at a lower opportunity cost compared to others, which forms the basis for gains from trade.

Trade Deficit: This term occurs when a country imports more goods and services than it exports, resulting in a negative balance of trade.