Free Trade
Plain definition
A policy of removing government barriers to trade -- no tariffs, quotas, or discriminatory regulations -- so goods and services move across borders at world prices. Trade agreements like NAFTA/USMCA institutionalize free trade between members.
In economics
Comparative advantage predicts free trade raises total output and lowers consumer prices, though it creates winners and losers: import-competing workers may lose while exporters and consumers gain. Modern agreements also cover services, investment, intellectual property, and labor standards.
Example
After NAFTA took effect in 1994, tariff-free trade among the US, Canada, and Mexico expanded auto and agricultural supply chains across all three countries.
'Free trade' does not mean trade with no rules. Modern free-trade agreements run to thousands of pages of rules on standards, dispute resolution, and property rights -- 'free' refers to the absence of border taxes and quotas, not the absence of regulation.