International Trade Policies

 
Governments the world over have attempted to frame their policies against the
background of their national interest. In fact, this has been so since the dawn of
recorded history.
In the field of international trade, four types  may be noted: (a) restrictive; (b)
mercantilistic; (c) free trade; and (d) protection.
Restrictive and Mercantilistic Policies
As the term apply suggests its meaning, a restrictive policy as observed during ancient
times and in the Middle Ages as a tyle of commercial policy subjected trade to stringent
regulations with the intention of keeping it solely in the hands of the town-people and at
the same time discriminated foreigners. In fact, foreign traders were kept under
surveillance while transacting trade in a foreign city.
On the other hand, mercantalistic policy, both as a doctrine and policy, was anchored on
the need to regulate domestic production and external trade in such a way as to build up
national wealth and power, and to safeguard the possession of particularly important
elements of power. Trade restriction were considered important and necessary to
prevent the treasure from being drained out of the country, although later writing
expressed the thought that national wealth was not identical with precious metals.
Writers of the period described as mercantilist laid stress to the organization  and
utilization of economic resources as a means of strengthening the political power of the
state, a thinking that aroused the imagination of the many countries of Europe
principally England, Holland, France, Germany, Spain and other against the background
of the inefficacy of the Guild System and the decline of the spiritual power of the church.
These two policies are now things of the past and consigned to past policy.
Policy of Free Trade
The Physiocrats, French economist during the 18th century, are credited of having coined
the maxim laissez fare which is the corner stone of free enterprise. However, it was
Adam Smith, the famous Scottish philosopher who applied the principle to economic
activity and more particularly to trade.
The free-trade theory assumed that every man knew his own interest better than
anyone else; and that everyone would follow his own interest than the interest of
anybody else; and the interest of the individual coincided with the interest of the
community.
Free Trade, defined. At this moment, it is important that the student should have a clear
understanding of the correct of free trade as a form of commercial policy.
Free trade does not mean absolute freedom to trade. Rather, it merely signifies a policy
which is characterized by the absence of restraints on trade. Thus, the imposition of
customs duties on goods entering into one country from another is deemed consistent
with the policy of free trade, provided that such imposition does not result in the slowing
down of the movement of goods not in the decrease in their quantity. Unlike the policy
of protection, it does not discriminate against imports of foreign goods in favor of
domestic products or interfere with exports in order to favor consumers in the home
market.
Clearly then, the rates of import duties imposed by countries which adhere to a policy of
free trade are those which are placed at a low level, just enough to provide the
government with a source of income.
Gains from Trade. A number of important advantages arising from international trade
may be briefly noted.
By means of an unfettered international trade, there is placed at the disposal of the
people many products which particularly could not have been obtained if a country
depends merely on its own resources. The benefit which a country derives on account of
the import of such goods is one of the reasons which explains why it is impossible to
express quantitatively the gains from international trade, for such a valuation would
involve the task of measuring the actual utilities derived by a nation from the possession
of such goods as those produced by other countries.
This international division of labor is merely a special case of inter-regional or territorial
division of labor and from the point of view of economics, most of what can be said in
favor of territorial division of labor, in general, applies to this case. Trade of any kind is a
necessary result of the division of labor and without division of labor it would not exist.
If each individual produced all the goods which he consumed, there would, of course, be
no need for trade. Likewise, if it were not for the possibility of buying and selling that is,
exchanging goods, the specialization of individuals upon certain lines of production could
not exist. Briefly stated, all participating countries benefit from geographical
specialization in accordance with comparative advantage. This circumstance accounts for
the reason why international trade is at times described as geographical division of
labor.
Second, a development of foreign trade results in an extension of the area within which
the specialization of industry can operate. Industry in recent years has been marked by a
tendency toward larger producing organizations. Certain known advantages in
manufacturing have resulted therefrom but at the same time the difficulty of marketing
has increased. Thus, the larger plant must reach out to wide markets in order to dispose
of its products profitably. Occasionally, a plant can be enlarged to its most efficient size
(economies of scale) only by finding a market outside the country. Hence, the birth of
export industries.
Third, there is observed the better application of labor, capital and the use of resources.
Through free trade, there is provided stimulus to efficiency as a result of foreign
competition and technology.
All such advantages support a policy of free trade.
 
Free of Managed Trade. In a world where the wave is apparently for free world trade
than was desired or agreed in bilateral or multilateral arrangements in the past, it may be
surprising to hear a noted American economist say that there really is no free trade,
“even though there’s plenty of talk about free trade.”
According to Daniel Brunstein, author of three best selling books on the economies of
Asia and Europe, politically managed trade has been found to be more successful. He is
referring particularly to Japan and Brussels (in behalf of the European Community) which
have never accepted the laissez-faire attitude of the United States.
Burnstein by the way, is right in his assessment of why the US, in reading Adam Smith
too literally, has found it difficult to compete with Japan and Europe which although
professing adherence to the basic principles of free enterprise, undertook the
transformation of their respective countries into market economies but at the same time
producing what is best for the national interest.
Burnstein cites particularly the success of the Tokyo and Brussels in convincing the
staunchest advocates of free trade in Washington to negotiate politically managed trade
arrangements among the big powers. Although during most of the bargaining for a new
General Tariffs and Trade (GATT) the US was trying to pressure the European
community to reduce the rather heavy subsidies that EC, particularly French farmers
were enjoying, in the end Washington found it expedient to allow the other big powers
to have a good deal of what they wanted so it could finally get the Uruguay Round
finalize the new GATT after about seven years of acrimonious debate.
By and large, the Uruguay Round produced a new agreement that reduce trade and tariff
barriers and there is therefore greater expectation that the updated GATT will stimulate
international trade, enhance the economies of small as well as big nations.
The US economist’s advice may probably be appropriate for the Philippines as for
political intervention in the shaping and management of national policies for trade and
economic development is concerned.
Trade Policies. Trade policies can be characterized as outward oriented or inward
oriented. An outward oriented strategy provides incentives which are neutral between
production for the domestic market exports. Because international trade is not positively
discouraged, the approach is often though, somewhat misleading, referred to as export
promotion. In fact, the essence of an outward-oriented strategy is neither discrimination
in favor of exports or bias against import substitution. An inward oriented strategy
usually involves great and high protection. This makes exports uncompetitive by raising
the costs of foreign inputs used in their production. Moreover, an increase in the relative
cost of domestic inputs may also occur through inflation or of an appreciation of the
exchange rate as the quantitative restrictions are introduced. Industrial incentives are
administered by an elaborate and extensive bureaucracy.
Outward-oriented policies favor tariffs over quantitative restrictions. These tariffs are
usually counter-balanced by other measures, including production subsidies and the
provision of the inputs at free prices. Governments seek to keep the exchange rate at a
level that maintains equal incentives to produce exports and imports substitutes. Overall
protection is lower under an outward-oriented strategy rather than under an inward-
orientation. Equally important, the spread between the highest and lowest rates of
protection is narrower.
Commercial Agreements
Commercial agreements sometimes termed invariably as commercial treaties (although
according to modern diplomatic usage, the term treaty is confined to more important
international agreements and those of lesser importance are termed as agreements ), do
not only have a long history of existence but moreover also have their important
contributions to the growth and development of international trade, more particularly
with respect to promoting of free trade between participating countries. As a matter of
fact, they were commonly observed in the relationships between towns and city-states
in the Middle Ages. Two of the most important and well-known early commercial
treaties were the commercial treaty of the United States with France in 1778 and the
Anglo-French treaty of 1860.
A commercial treaty may be defined simply as a contract between stated relating
primarily to trade. In a limited sense, a treaty is confined to international agreements that
meet certain formalities, as for instance, the need for ratification by the Senate in the
case of the United States and the Philippines before the same could become binding and
effective. However, insofar as content and binding character are concerned, there is not
much fundamental difference between treaties and other international understanding,
such as: executive agreements, conventions, exchange of note, and aide memoire.
In ancient times, treaties were concerned more with securing the right to participate in a
particular trade with details of rates of customs duties. This was so because trade then
was considered a matter of privilege instead of a right. However, under modern
commercial treaties, tariff rates have come to be the most important subject of
negotiations, for a presumption has developed which became widely accepted that trade
in general is open to all.
The most comprehensive form of commercial agreement is known as the treaty of amity
(friendship), commerce and navigation.
Ratification of Treaties. There are three distinct steps involved in treaty making, namely:
negotiation, approval, and exchange of ratifications. The role of the diplomatic agents
lies in the negotiation of the treaty, and later, in the formal exchange of ratifications
after the home government has accepted it.
Thus, for treaty to become effective and binding upon the signatory countries, there is
need to have it ratified by their respective governments. The old Constitution of the
Philippines provided that the power to ratify or reject treaties was vested upon the
Philippine Senate (now defunct) because it is composed of mature and wise men,
patterned after American practice.
The need to ratify treaties or agreements is born of historical experience, for it may be
recalled that, during ancient times prior to the need for ratification of treaties, not
infrequently there were cases which arose involving what have come to be known as
“entangling military alliances.” This meant that owing to the fact that sovereign rulers
have entered into secret agreement among themselves, a situation could arise, as it has
arisen in the past, when an attack against one country by a third country has been
construed and meant as an attack against all of them. Thus, the people of these countries
were forced to go to war and they did not know actually why they were at war.
Moreover, when treaties or agreements were made subject to ratification, each
provision of such treaties or agreements was exposed to searching analysis, so that
whatever adverse provision might have been incorporated therein and has escaped the
attention of the negotiators could be detected and thus harm might be prevented.
If a treaty has been negotiated but not ratified, the result is that the treaty does not take
effect. Hence, it would appear as if no treaty has been negotiated and entered into
among the contracting parties.
Origin of Most-Favored-Nation Clause. Most-favored-nation clause is best defined as
“equality of trading opportunity.”
Before the dawn of the Christian era and even up to modern times, a number of
problems in the field of commerce concerned not with respect to the rules by which
international trading took place but rather to the right of trade. And while countries may
have entered into commercial treaties which accorded to one another the “right” to
trade, nevertheless, there is nothing that would prevent a country from entering into a
treaty with other countries in the future and according them with a favorable treatment
not extended to the others before. This would confer the latter countries with the
position of most-favored nations while at the same time the others are, in effect,
discriminated against. To prevent such as situation, a provision was incorporated in
commercial treaties which has come to be known as most-favored-nation treatment
clause.
Briefly stated, the most-favored-nation clause as incorporated in treaties did not grant
special favors or privileges but merely guaranteed equality of treatment equal to that of
the most-favored nation.
Most-Favored-Nation-Treatment Clause, defined. By definition most-favored-nation-
treatment clause as provision contained in many commercial agreements, simply refers
to a stipulation whereby any concession or concessions which a nation signatory to an
agreement may grant to a third country or countries shall be enjoyed by and accrued  to
the other nation signatory to that agreement. Thus, as may be observed, the purpose
behind the incorporation of this clause in commercial agreements is to accord treatment
equal to that of the most-favored-nation.
Most-favored-nation treatment is both a principle of public international law and an
instrument of economic policy. It establishes equality among sovereign states in their
trading relations with one another.
Generally speaking, the primary application of most-favored-nation treatment has
always been in respect of the duties charged on imports although it may include a wide
area of economic activity, such as, for instance: navigation in territorial waters,
conditions of immigration; considerations pertaining to consular invoices; import entry;
quotas; industrial rights; protection of patents; trade-marks; copyrights and many others.
Mos-favored-nation treatment clause may take a variety of forms as found in
commercial treaties or agreements. They are conditional, unconditional, bilateral and
unilateral.
The bilateral form is reciprocally binding on both parties to the treaty and is the usual
form in all treaties between states on equal international standing. On the other hand,
this is not so in the case of unilateral form where only one nation is obligated in favor of
another. Such example is typical in commercial treaties between weak and dominant
powers, victors and vanquished states.
In the treaty of 1856 between the United States and Siam, as Thailand was then called,
the most-favored-nation treatment was unilaterally accorder to the United Stated by
Siam. However, no similar reciprocal extension of the same privileges were granted by
the United Stated to Siamese subjects.
The first commercial treaty entered by the United States with France in 1778 contained
the conditional form of most-favored-nation treatment clause in which the contracting
parties did not guarantee to each other all concessions made to third parties but only
those made gratuitously. The Treaty between the United States and Japan in 1911
likewise is an example of a conditional form of most-favored-nation treatment clause.
The conditional form of the clause distinguishes between concessions granted
gratuitously and concessions obtained at a price. A contracting party which grants
concessions to a third party gratuitously must grant the same concessions immediately
to the second party signatory to the treaty. However, any favor which a third country
purchases from either contracting party need not be extended to the other part except
upon receipt of a similar or equivalent concession.
In the case of unconditional form, concessions or favors granted by a contracting party
to a third country are automatically extended to all other countries entitles to most-
favored-nation treatment. The distinct advantage that may be observed from the
adoption of unconditional form of the most-favored-nation treatment is that is
generalizes any concession made by one nation to another and thus gives added security
discriminatory treatment as between  rival nations.
Most-favored-nation treatment often has been advocated as well as attacked as a device
to extend free trade although probably in theory, it can be used not only by a free-trade
country but also by a protectionist country since it merely guaranties treatment equal to
that enjoyed by any third state.
Bilateral Agreements in Recent Years. Bilateral agreements in recent years are looked
upon by developing countries with favorable acceptance supported by their belief that
bilateral negotiation is a method of which young countries can penetrate markets which
would not be accessible to them if they had to face the competition of more experienced
suppliers on a basis of equality and without any protection.
Bilateral agreements may be classified in three categories, according to whether they are
with the industrial countries, with other developing countries, or with planned-economy
countries. With the industrial countries the aim is chiefly to obtain more or less privilege
access for one’s exports by opening one’s own market more or less to the partner’s
products. These negotiations do not necessarily lead to the conclusion of official
agreements, and certain governments, which have become skilled in this subtle game,
have managed to place on certain markets products, which would not have been
purchased otherwise.
Between developing countries, the aim is above all to overcome the lack of foreign
exchange and increase the volume of trade by means of a barter compensation
operation. Actually, the aim is to obtain a quota preference which compels the importer
to purchase from the partners. This technique is frequently used by countries as India
and the United Arab Republic, which seek to penetrate the markets of other developing
countries and consider that a preference is necessary in order to exclude the traditional
suppliers. In this case, a diversification of trade flows no accident but, rather, the prime
objective of the agreement.
In the case of negotiations with planned-economy countries, the motive of the
developing countries is somewhat different. The purpose is still of course, to find new
markets for exports but bilateral agreements in this case do not necessarily lead to an
increase in total exports. To date, the Eastern countries have purchased chiefly products
which find outlets on world markets in convertible currency. The policy of selling within
the framework of clearing agreements is likely to replace hard currency earnings by soft
currencies. This is what happened in certain cases (cotton in the UAR and tobacco in
Greece). In other cases, however, the bilateral agreement has made it possible to launch
an additional flow of trade Ghana for instance, considers that thanks to its agreements
with USSR and other Eastern European countries which will probably outlive the
disappearance of the bilateral agreements.
Reciprocity and National Treatment. In the adoption and development of a commercial
treaty, it may be observed that every nation, generally speaking, has a two-fold
objective: (a) to obtain advantages and continue to preserve them; and (b) to avoid and
guard against any discriminatory treatment. These objectives are sought to be obtained
through reciprocity.
Reciprocity, from the Latin term reciprocus, means returning the same way,
from re meaning “back” and pro meaning “forward”. However, in a very particular sense,
reciprocity refers to the commercial policy under which a country grants special tariff
advantages to imports of another country in return for special tariff advantages granted
to it by the other country. In some instances, governments wish the guarantee or
reciprocal treatment be applied not only to products which enter the stream of
commerce and trade but likewise to nationals. Hence, the term national
treatment. National treatment, simply means equality of treatment accorded to
nationals. As may be inferred, national treatment is the rule between equals.
However, in not a few instances, world powers have exacted from weal and poor nations
some form of special privilege for their nations thereby making” national treatment”
meaningless and a farce. For instance, at different times, China, Egypt, Morocco, Iran,
Thailand, and Turkey have been constrained to grant extraterritorial rights to states of
European civilization, that is, exemption from the operation of local law. Expressed
simply, this means that European nationals are not subject to the laws of the country
granting extraterritoriality in which they may be resident, but rather to the laws of their
own country and to the jurisdiction of courts and authorities regulated by their own
municipal regulations.
Thus, not infrequently, the “reciprocity” arrangements have at times been nullified
somewhat as when one of the contracting parties to the agreement has extended to
some third nation even more liberal concessions that it had previously granted to others.
In order to obviate the possibility of such an unfortunate circumstance which is unfair
and works adversely to the other participating nation, it has become a common practice
to incorporate in commercial treaties the most-favored-nation treatment clause that has
been referred to and discussed in the foregoing paragraphs.
Multilateral Agreements. While commercial treaties are bilateral in form, multilateral
agreements are not very uncommon. As a matter of fact, multilateral agreements are
becoming quite popular in view of the recognition that nations have oftentimes resolved
conflicts through the use of such form agreements may be mentioned, such as:
International Trade Organization; Convention on Nomenclature for the Classification of
Goods and Customs Tariffs entered into among Belgium, Denmark, France, Federal
Republic of Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal,
Sweden, Turkey, and United Kingdom, signed on December  15, 1950; and the
International Monetary Fund.
While many arguments could be advanced in favor of the use of multilateral agreements,
however, one major short-coming that weighs heavily against its use to a certain extent
is that, after a multilateral convention has been laboriously prepared, negotiated and
signed, there is still no guarantee that the said agreement will come into force and effect
since the same will depend on the ratification by a number of signatory countries
required for that purpose. A classical example is the International Trade Organization
which met a premature death on account of its failure to be ratified by a greater number
of signatory countries.
Multilateral Trade Negotiations. In the recent years past, representatives of various
governments meet from time to time in efforts to approach the problem of trade
liberalization through multilateral trade negotiations, the objective of which is simply
“the expansion and ever-greater liberalization of world trade.”
While participating countries have agreed to negotiate within the framework of the
General Agreement on Tariffs and Trade, nevertheless, the trade negotiation, the latest
of which is the Manila Declaration of 77, is anchored “on the basis of the principles of
mutual advantages through mutual commitment, and over-all reciprocity, while
observing the most-favored nation clause.”
Policy of Protection
If free trade offers distinct advantages to the nation adopting such a policy why them it
may be asked, do a number of nations impose a lot of restrictions and regulations
governing the flow of goods between them.
Unlike free trade which is responsible for geographical division of labor and the
attendant blessings of specialization, the policy of protection seems to lack any concrete
foundation. Rather, a number of arguments have been presented to support such a
policy which at times are in conflict with one another, if not to say, fallacious.
Generally speaking, however, the main thesis of a policy of protection is that of shielding
domestic industries from the competition of foreign goods which might endanger their
existence.
Protection, defined. By definition, a policy of protection maybe described as  referring
to a system of promoting the growth and development of home industries through the
use of high rates of import duties sufficient to reduce the kind and quantity of goods
from foreign countries coming into another, if not to shut them out completely. This is
not to say, however, that tariffs are the only tools of protection. Others like for instance,
quotas, exchange controls, licensing regulations, etc., are invariably used by some
countries designed for the same end that of providing protection to domestic industries.
 
Origin of Protection
The origin of protection, both as doctrine and a policy, may be found as early as the
sixteenth century when England and the other countries of Europe were each
endeavoring to secure a favorable balance of trade. This economic policy centers around
what is known as the mercantilist theory, under which it was considered that it was
highly important to possess  and keep within the country a large amount of the precious
metals; that foreign trade was of more value to a country than domestic trade provided
that there were more exports than imports giving rise to the concept of favorable
balance of trade; that the extractive ones, and that a dense population is an element of
strength to a country in line with the objective of making the country a political in line
with the objective of making the country a political power. Thus, the importance of
colonies as direct sources of precious metals like gold and silver did not escape the
attention of the mercantilists just as they were to serve as sources of raw materials
needed by the manufacturing industries of the mother country and outlet for finished
products.
It was further believed that manufactures make possible a dense population, lead to an
export trade of large value, and offer unlimited opportunities for business enterprise. In
order to further this policy, the mercantilist considered state action in the form of
protective duties, bounties, restrictions or other artificial and necessary for the
development of manufacture and trade.
In England, protectionism manifested itself in a number of ways. For instance, one recalls
a policy of agricultural protection which culminated in the enactment of the Corn Laws.
Likewise, the Navigation Acts which favored English vessels formed an integral part of
the English protectionist policy. In the case of France, on the other hand, the policy of
protection found its fullest expression during the years prior to the outbreak of the first
world war although quite a number of measures have been formulated and adopted
many years before. In fact, French had the highest tariff walls of all countries in central
Europe, not to say further that her tariff system was likewise the most complicated then.
The policy of protection was championed by Alexander Hamilton, the first secretary of
the United States Treasury. In his famous “Report on Manufactures”, he led strong
opportunities to free trade and promulgated the theory of nationalism and the
encouragement of domestic manufactures by means of restricting imports.
Closely following the heels of Alexander Hamilton was a German economist, Friederich
List who, in his National System of Political Economy, advocated nationalism at the
expense of cosmopolitanism. The main reason for adopting a protective policy according
to him lies in the fact that some countries have reached earlier a higher degree of
economic development then others. He pointed out that every nation should begin by
fostering agriculture through the use of free trade and when it is economically far
advanced that it can manufacture for itself, a system of protection should be employed
to allow the home industries to develop themselves. However, he believed that such
protection should only be temporary and that when the domestic industries have already
reached their highest degree of efficiency in their production, such protection must be
withdrawn.
After the end of the First World War, the trend toward protection has become very
pronounced all over the world. This was not due to the adoption of any theory in
economics but rather a by-product of the rising tide of nationalism.
In the 1920’s there emerged a number of factors that had the effect of changing beyond
recognition the terms in which the old controversies over international trading policies
had been conducted before. The birth of capitalism with its ups and downs had made it
necessary to protect domestic industries through the imposition of high rates of imports
duties and thereby keep away the dumping of cheap goods from abroad.
Today, a number of governments still keep in reserve the legislative power or regulatory
power of restricting or prohibiting imports. It is on the basis of such powers that a
number of countries restrict the entry of certain products from planned-economy
countries. In the United States, the government can restrict imports of certain products
on the strength of provisions concerning national security or unfair business practices
and these can be very broadly interpreted.
Many developing countries have elected to foster the growth of local industry behind
the protection of high tariffs and other import restrictions over the past few decades.
Trade Policy Instruments. The trade policy instruments a country can use to protect its
domestic industry by restricting imports are basically of two types:

1. Those influencing the price of the imported product through customs duties,
taxed and other charges levied on importation.
2. Those influencing the quantity of foreign goods admitted: quantitative import
restrictions, which usually take the form of import quotas or licensing or both
combined. Another way of regulating the flow of imports and exports is by means of
foreign exchange regulations. There is also a whole series of technical regulations
such as sanitary regulations and regulations concerning labelling and marking, as well
as certain formalities such as proforma invoices, consular invoices and certificates of
origin.
With the gradual achievement of convertibility in international trade, resource to
quantitative import restrictions has tended to become the exception to general practice,
at least in the majority of the developed countries, while the customs tariff as gained in
importance as a trade policy instrument. This is in line with the concept of non-
discrimination in international trade one of the basic principles of the General
Agreement of Tariffs and Trade which governs 85% of total world trade. But with the
recent tendency towards systematic tariff reductions, increased attention is now being
focused on various other forms of foreign trade restrictions, usually referred to as “non-
tariff barriers.”
An Over-All View
As may be helpful to recall, throughout the nineteenth century and about the first third
of the twentieth, traditional economic theory had been the cornerstone of a strong case
for free trade. Only two exceptions to free trade were recognized as having a sound
economic base: tariff duties to protect “infant industries” which were expected
eventually to be able to compete in world markets without protection, and duties to
raise revenue. International payments were governed by the “rules of the game” required
by the gold standard exchange rates which were fixed within narrow limits and the
complete absence of any trade and exchange controls. Little, if any, distinction in the
applicability of these policies was made between the highly industrialized countries and
the rest of the world.
After Word War II the less developed countries were faced by a policy dilemma. Many
economist began to  believe that as these countries place primary emphasized on
accelerating their economic growth, they would have to deviate from the orthodox
policies. In their view, the less developed countries had not benefited as much from free
trade as had the highly industrialized nations. Orthodox policies had oriented the
economies of the developing countries excessively toward the production of agricultural
commodities and raw materials, often with primitive techniques. Relatively low prices in
world markets for these products and sharp fluctuations in these prices had condemned
these countries to subsistence living standards. Foreign investment, while improving
methods of export production, had not given momentum to the domestic economy. For
these reasons, several economists became convinced that the way to economic
development lay through accelerated industrialization and the attainment of diversified
economies and that these would necessitate considerable trade and exchange control
and higher tariffs for long periods of time,
Nevertheless, these  notwithstanding, many economists continued to believe in the
policy of free trade. This is so, since according to their view, the rather wide and
extensive use of controls doubtless interfered with the maximum allocation and
utilization of resources. They further contented that the poorer countries could ill afford
to neglect or lose the benefits arising from the flow of international trade.
To further deepen students’  knowledge on foreign trade policies they may
watch this videos   and  read this article :  https://courses.lumenlearning.com/wm-
macroeconomics/chapter/trade-policy-organizations-and-agreements/ (Links to an
external site.) and
https://courses.lumenlearning.com/wmopen-introbusiness/chapter/global-trade-
agreements-and-organizations/