by Peter Gilchrist

Created on: February 26, 2008

Since time immemorial countries have reaped great wealth from trade. It also gave rise to extensive exploration and European colonisation. It expanded in a situation that was largely free from regulation. Today, modern communication and transport, has enabled trade to flourish.

It is widely believed that without regulation the benefits of trade will not be fully realised if countries apply import restrictions and subsidise exports so free trade organizations, notably the World Trade Organization, have been established. It is assumed that under a broad umbrella of regulation against unfair practices the market will ensure that the best economic outcomes.

However, it is not as simple as that. Even without trade restrictions and subsidies there are down sides to trade that should not be ignored. It is important that they be aired in a country where free markets are seen as the source of all good.

One is that by specialising in a single or few products an economy becomes very vulnerable for just as diversity is vital for a sound environment so it is essential for a flourishing economy. This is exacerbated if the colonial rulers import their own goods and services from the home country. Thus the troubles in many ex colonies can be seen as caused by their inheritance of economies that are empty shells, utterly lacking any self-sufficiency.

Second is that free trade can be a way of avoiding environmental good practice that would be forbidden in the importing country. This problem is highlighted if companies from the importing country develop the exports. The environment does not respect national borders and globalisation of the economy is a dangerous way to go if it is used as a way to avoid environmental responsibility.

Thirdly there is a danger that the exporting country has labour practices that would not be tolerated in the importing country. Again this is especially harmful if production in the exporting country in controlled by companies from the importing countries.

All of these ideas must be taken seriously if we as a race are to prosper or even survive in the long run and free trade cannot in itself ensure that conditions for long-term prosperity exist.

For that reason we must ensure that, at the very least, basic environmental safeguards are adhered to in all countries.

In the case of fragile ecosystems such as the Amazon it is virtually unthinkable that the thirst for cheap, available power and the quasi-religious trust in free markets should be seen as excusing any environmental destruction.

Learn more about this author, Peter Gilchrist.
Click here to send this author comments or questions.