International trade policy: Departure from free trade

In a world with no international boundaries and no sovereign governments, all trade would be domestic and there could be no international trade policy. Governments and national sovereignty introduce international trade, but the gains from free trade (Kemp 1962; Samuelson 1962) remain unaffected. Yet governments have often chosen to depart from free trade. Economic research has taken two approaches to the departures from free trade. A conventional view in the literature of international economics has been normative in developing a research agenda that shows how departure from free trade can enhance efficiency and maximize social welfare. A political-economy view synonymous with public (or rational) choice has approached departure from free trade from a positive perspective (explaining and predicting rather than recommending), and has shown why trade policy might compromise the efficiency of free trade for political and income-distribution reasons. The conventional normative views have origins in classical nineteenth century justifications put forward as exceptions to the case for the efficiency of free trade.