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Trebilcock, Michael; Fishbein, Michael --- "International trade: barriers to trade" [2007] ELECD 92; in Guzman, T. Andrew; Sykes, O. Alan (eds), "Research Handbook in International Economic Law" (Edward Elgar Publishing, 2007)

Book Title: Research Handbook in International Economic Law

Editor(s): Guzman, T. Andrew; Sykes, O. Alan

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843766742

Section: Chapter 1

Section Title: International trade: barriers to trade

Author(s): Trebilcock, Michael; Fishbein, Michael

Number of pages: 61

Extract:

1. International trade: barriers to trade
Michael Trebilcock and Michael Fishbein



1. History and background to the GATT

1.1. Classical free trade theory
In The Wealth of Nations, published in 1776, Adam Smith argued that the
gains that could be realized from specialization in domestic economic activity
could be extended to international economic activity:1

The tailor does not attempt to make his own shoes, but buys them of the shoemaker.
The shoemaker does not attempt to make his own clothes, but employs a tailor . . .
What is prudence in the conduct of every private family, can scarcely be folly in that
of a great kingdom. If a foreign country can supply us with a commodity cheaper
than we ourselves can make it, better buy it of them with some part of the produce
of our own industry, employed in a way in which we have some advantage.2

Smith's Theory of Absolute Advantage essentially stated that countries should
export those products which they could produce more efficiently than other
countries and import those products which they could not. For example, if
countries with tropical climates can produce bananas or pineapples more
cheaply than countries with temperate climates, the latter should purchase these
products from the former. Conversely, if countries with industrialized
economies can produce hydro-electric plants or communications systems more
efficiently than countries who enjoy a cost advantage in producing tropical
fruit, the latter should buy these products from the former. In Smith's view,
international trade ...