Over the years, governments throughout the world have been nervous about implementing free trade policies, largely because they feel compelled to protect national industries that could not withstand the competition that free trade would create. With the global economic crisis of the 1920s and 1930s, government throughout the world pursued strongly protectionist policies. In fact, many experts believe that passage of the Smoot-Hawley tariffs in the United States in 1930 was a major contributor to the onset of global depression.

1. Describe how free trade works (ideally). In the discussion, be sure to address barriers to free trade associated with protectionist policies. (1-2 pages, single spaced)
2. What are the principal arguments supporting free trade? (1 page, single spaced)
3. What are the principal arguments against free trade? (1 page, single spaced)
4. What regimes exist to promote free trade globally? (1 page, single spaced)
5. The law of comparative advantage holds that countries should concentrate on producing goods and services where they have a comparative advantage, rather than producing all the things they are good at producing. Since the 1960s, America’s comparative advantage has been in high tech products and advanced services. Because it does not have a comparative advantage in basic manufacturing (although it has always been good at manufacturing), it has ceded manufacturing efforts to developing countries, such as China, India, Taiwan, and Malaysia and has focused on strengthening its high tech and service sectors. The economic crisis of 2008-2009 has caused many thoughtful economists to re-think this long-standing policy. Why are they now beginning to question the US’s abandonment of basic manufacturing capabilities? (1-2 pages, single spaced)
6. It is generally agreed that China has done everything possible to avoid pursuing free-trade policies. Briefly explain. How do they get away with it? (1 page, single spaced)