What Does the Term Free Trade Mean?


Quick Answer

Free trade means unrestricted, open sale of goods and services between countries. The unrestricted sale of goods means the elimination of trade barriers such as tariffs, duties and quotas. Free trade is usually considered a win for both countries involved, maximizing the economic output of both economies.

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Full Answer

Free trade is intended to allow foreign products and services to better compete with domestic businesses. However, in practice, free trade is usually more beneficial for larger, rich countries and widens the gap between wealthy and poor countries. Some poorer countries have grown into powerful economies due to free trade, such as China and India.

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