International economic policy

“Economic policy is today perhaps the most important part of America’s interaction with the rest of the world. And yet the culture of international economic policy in the world’s most powerful democracy is not democratic. ” (1) The issue of “free trade” ,in which trade in goods and services can be passed between two countries without any trade barriers, has become major source of political debate in recent times which went on to point out the other world issues of global poverty, inequality and opportunity.

The main feature of the free trade is the availability of subsidies for manufactures, free access to markets, trade without the taxes, policies etc. (2) Origin of free trade The origin of free trade is related to the policy of mercantilism which was originated in Europe in early 1500 . The famous economists David Ricardo and Adam Smith were the adamant opponents of this policy. Any how the policy of free trade was developed from this view of oppositions.

Thereafter in Nether lands declared Free trade and freedom of thought which was turned to be a dispute between Mercantilist and Free trade for many years. The beginning of the free trade in US is mainly attributed to the report of first U. S. 1. Joseph Stiglitz, , New Republic, 2000 2. John R. Mc Arthur, The selling of “Free Trade” publ. University of California 2

Secretary of the Treasury, Alexander Hamilton on manufactures in which he argued the scope of tariff for helping new industries. Later , US adopted the Hawley-Smooth Tariff Act against which the Franklin D. Roosevelt ,the leader of Democratic party way out to Hamilton’s Reciprocity with moderate tariff and subsidy to industries . This was brought to an end in 1970s once the aspect of Free trade area began for the US after the initiative process taken by Kennedy in late sixties.

Later on Us adopted the policy of reduced tariff barriers and free trade which led to the emergence of General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO). Later US had entered in to a number of trade agreements like, North American Free trade Agreement (NAFTA) in 1990s, Dominican Republic-Central America Free Trade Agreement (CAFTA) in 2006 apart from other bilateral agreements. (3)