Monday, July 17, 2006

Free Trade Is Not An "Act of Good Will"

In today's editorial of Sweden's biggest news paper, Aftonbladet, Editorial writer Mats Engström calls for trade restrictions from the E.U. on Israel to punish it for its alleged crimes.

There are several probalems with this. First of all, as all regular readers of this blog knows, I do not think that Israel is the guilty party here . Instead, it is is Hamas and Hezbollah which is at fault here.

But even apart from this, I also object to his view that free trade agreements with other countries is an altruistic act, or an act of good will .

Free trade is always a mutually beneficial act, which because of the law of comparative advantage , will always result in a higher standard of living for all particiants.

While Israel would undoubtedely suffer more from Israeli-EU trade sanctions than the EU itself would because of the fact that the EU is much larger, with more than 450 million people versus 7 million, and as a result of this some of the worst anti-Israel fanatics might still favor sanctions on Israel even after being educated about the effects of sanctions, it is nevertheless the case that regular EU citizens would lose from anti-Israeli protectionist activities.

Whatever one's view of Israel's right to self-defence in the face of rocket attacks and kidnappings from Hezbollah and Hamas, it should be clear that trade barriers against it would harm the EU as well.


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