CHAPTER 9APPLICATION: INTERNATIONAL TRADE195CASE STUDYTRADE AGREEMENTSA country can take one of two approaches to achieving free trade. It can take aunilateralapproach and remove its trade restrictions on its own. This is the ap-proach that Great Britain took in the nineteenth century and that Chile andSouth Korea have taken in recent years. Alternatively, a country can take a mul-tilateralapproach and reduce its trade restrictions while other countries do theTHE UNFAIR-COMPETITION ARGUMENTA common argument is that free trade is desirable only if all countries play by thesame rules. If firms in different countries are subject to different laws and regu-lations, then it is unfair (the argument goes) to expect the firms to compete in theinternational marketplace. For instance, suppose that the government of Neigh-borland subsidizes its steel industry by giving steel companies large tax breaks.
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