How do we make international trade fair?

Since the desire for “Fair Trade” is the supporting mantra behind each and every threat by government to use tariffs, quotas, or other trade restrictions, shouldn’t fair trade be defined and defended?

There is fair trade whenever trading partners reach agreement on mutually determined prices, terms, and other conditions, whether such partners are individuals, agents, firms or co-operatives.

If such entities attempt to, but can’t reach a mutually acceptable exchange, it is most often due to one or both participants in the bargain determining that  terms of the proposed trade transaction are unacceptable or unfair. Only the parties to the trade transaction can determine what is fair, for them and them alone.

Can government produce fair trade?

I probably don’t need to answer that question, as you likely intuitively already know the answer. I’m sure you wouldn’t hire a representative from the retail grocer association to have the power to determine the price of your groceries, instead of allowing free market competition among grocers to be the primary price determinant. Why? Because the association represents the interests of its member stores and would make every attempt to enhance the grocers’ profit margin, all to your disadvantage.

You shouldn’t want government to interfere with your international trades for the same reason.

When we ask government to govern trade negotiations by means of tariffs, quotas, and other restrictions, it always pursues someone’s interest. It may pursue the interests of consumers, or producers, or distributors, or retailers. If this pursuit results in a change in price or other terms than would otherwise be negotiated via voluntary exchange, the intervention by government would result in favoring one interest to the transaction and disfavoring the others.

Example: If government implements a tariff to favor US producers, to protect them from what it determines to be “unfair competition,” it disfavors US consumers by making their purchases more expensive, harder to get, etc.

By this reasoning we must conclude that government can only produce UN-FAIR trade.

The only way that government can pursue the interests of all is to refrain from intervening in international trade.

#separationofeconomyandstate    Bruce-thumbnail

Bruce Hillis

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