Free-trade agreements potentially protectionist

“Are free-trade agreements protectionist? It sounds like a silly question, but it’s always worth asking of regional (as opposed to global) trade pacts — like the ones the U.S. is seriously considering with the European Union and the Pacific Rim,” Evan Soltas wrote today for Bloomberg’s online news site. Soltas continued, “Economists are often mocked for free-trade worship, but they’re skeptical when appropriate. Jacob Viner, a University of Chicago economist, argued in 1950 that free-trade agreements don’t necessarily promote free trade. Trade deals have two effects, he said: They create trade by lowering the cost of international exchange, but they also divert it by the selective reduction of barriers. Whether the first or the second effect predominates determines whether the deal is good or bad.” Read the full article here. | Raymond Matt, CFP, CLU, TEP, CHS

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