Free Trade Today

The book is a compilation of three lectures delivered by Professor Bhagwati at the Stockholm School of Economics. Each of these, true to Prof. Bhagwati's trademark style, is strongly in favor of free trade. In his first lecture, he takes on those economists who have broken ranks with the free traders and presents economics arguments demonstrating why free trade is better. In his second lecture, he takes on the environmentalists and do-gooders of the world and again demonstrates why there is nothing about free trade that is inherently detrimental to the environment or to labor standards across the globe. Finally in his third lecture, he talks about how the dynamics of free trade is actually playing out, frequently in the political market place and how preferential trade agreements (PTAs) which are the rage of the day are actually a bane for free today because while PTAs reduce trade barriers for the member countries, they actually raise the trade barriers for others out of the PTAs and hence instead of a global free trade regime through WTO and GATT, we have a Pandora of PTAs that is an actual mess. The key insight which I gained from one of the lectures was the following: Every time there is a market failure, what some people would shout is that free trade is no longer the best policy and hence should be disbanded. What Bhagwati and Ramaswami showed in a historical and seminal paper in the field of international trade was that, in case there is a distortion, the solution is not to disband free trade but to embrace policies that correct the distortion and once corrected, revert back to free trade. For instance, if the distortion is domestic, then a domestic tax-cum-subsidy policy targeting it will be appropriate and free trade can then be restored as the suitable first-best trade policy. The book is somewhat more technical than his more popular book, In Defense of Globalization but that is understandable because this is intended for a different audience and has a different purpose in mind. Venture into it only if you remember some of your economics from ECON 101 and 201 or else you are better sticking with In Defense of Globalization.

Why do so many people rate this as a difficult read? I thought it was a well written book. I learned a few things from it too. For example, it never occurred to me that free trade treaties (bilateral agreements) are not really free trade. Read that book and find out why. I did think that he was a bit biased in favor of a certain third world country a bit. However, I don't think it was intentional on his part.

Don't let this slim volume lead you to believe this is a book of light reading. The essays it contains are extremely valuable and packed tight with information, insight, and great thinking.There are also many very valuable footnotes that can lead you to deeper reading on the subject of the current state of thinking on the very important topic of Free Trade.Dr. Bhagwati is a stalwart of Free Trade and has the intellectual and verbal firepower to stand up for this very important concept and its role in relieving poverty around the world. He isn't a beautiful writer, but he certainly is effective and I am so glad to be able to have his writing and thinking available to me. This book is a fine addition and should be read by those on both sides of this issue with an open mind. Dr. Bhagwati is one of those important thinkers that will benefit your own thinking even when you disagree with them because it will force you to sharpen your own thinking and force you to build better arguments.One of the great parts of the first essay is when he takes us through the sequence of thought as arguments were put forward, successfully attacked and new models were built, attacked, and re-built until the present day. He is also very honest about the current weaknesses in present models and possible paths to pursue as a way to solve them. Just very valuable stuff.