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This chapter focuses on the current controversies about the multilateral trading system, particularly the World Trade Organization (WTO). It provides an overview of how the WTO was criticized by nongovernmental organizations (NGOs), which attacked the WTO as an antidemocratic institution that has struck down environmental regulations by ruling them inconsistent with world trade laws. The chapter examines the WTO's rules and dispute settlement system and U.S.–China trade war. It analyzes the rise of regional trade arrangements, such as the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP) agreement. It also points out the importance of unilateral trade policy changes that are rooted in domestic reforms.

This chapter takes a look at developing countries and confirms whether free trade is beneficial in promoting economic development. It analyzes whether countries such as Japan, Korea, and China grow rich by rejecting free trade and instead pursuing closed markets and industrial policies. The chapter addresses the issue of fairtrade and how rich-country agricultural subsidies and import tariffs harm developing countries. It also assesses how developing countries harm themselves with their own anti-trade policies. It discusses whether protectionist trade policies contributed to the East Asian growth miracle, whether labor standards should be used to address worker exploitation in sweatshops, and whether “fair trade” offers a satisfactory route to development.

Chapter 5 deals with the negotiations between the EEC and Spain from September 1967 to June 1970. Madrid, the weaker party, achieved its requests: first, that Spain’s main export commodities were not discriminated, particularly due to the Common Agricultural Policy; second, that once Spanish industry could export, Spain would have generous access to the Common Market; third, that there should be no reciprocal requirement that Spain open its domestic market to the Six; and finally, that there would be no political conditionality attached. The 1970 Agreement guaranteed lucrative trade preferences for the Spanish economy on the Common Market and also implicitly committed the Six to maintain political stability in Spain. Spaniards persuaded the Six that economic development would make the Spanish political regime evolve towards governance comparable to the rest of Western Europe.

The 1970 Agreement was intended to regulate trade relations between the Six and Spain for six years. At the end of 1972, however, Chapter 8 shows, for the Six/Nine the question was no longer that of negotiating additional concessions for Spanish exports but of the inclusion of Spain into the pan-European Free-Trade Area, to begin by 1977. In the summer of 1975, the Spanish Council of Ministers, under the influence of the minister of commerce, refused to ratify the FTA with the EEC. The Spanish government wished to avoid a transformation into a customs union or inclusion in an FTA in which Spanish producers would face mounting competition by West-European producers. The 1970 Agreement remained in force until Spain became a full member of the three European Communities, on 1 January 1986, transforming it into a sort of pre-accession arrangement for which it was not prepared.

This chapter sets out basic facts about international trade and the U.S. economy. It describes how world trade has expanded rapidly in the recent decades and explains how the development provides the context in which to consider trade policy. The chapter discusses the reasons for the increase in trade and how trade has changed with the fragmentation of production and the increase in trade of intermediate goods. It talks about the state of public opinion on the question of globalization. It also analyzes protectionist policies that directly harm employment in domestic industries by raising production costs in addition to forcing consumers to pay higher price for the products they buy.

This chapter provides a background on why free trade is considered to be a desirable policy. It explains whether the most frequently made criticisms of free trade, such as its adverse impact on workers and the environment, have merit. It discusses what is the World Trade Organization (WTO), as well as how world trade rules erode a country's sovereignty and undermine its health and environmental regulation. The chapter also introduces basic economic principles and empirical evidence regarding international trade and trade policy. It mentions the perspective on free trade that was originally developed by David Hume and Adam Smith in eighteenth-century Scotland.

After The Hague summit of the European Council in 1969 Madrid calculated that Spain’s terms of access to the Common Market would feasibly improve after the signing ceremony of the 1970 Agreement. The Spanish government was determined to continue the negotiations with the EEC for new concessions. First, the Spanish government battled for the EEC to grant them the benefits of the Generalized System of Preferences, which the French defeated. Second, Madrid requested further preference in agricultural trade, to the point of reaching a quasi-membership status in the CAP, without EEC membership. Third, Madrid pretended to use trade with Eastern Europe and closer relations with the EFTA to place pressure on EEC governments. The three attempts were unsuccessful because, as Chapter 7 shows, no alternative to the EEC existed for Spain to guarantee outlets for Spanish agricultural and industrial produce.

This chapter concludes that international trade and trade policies are frequently the object of condemnation rather than approbation. It explains how the condemnation are often the result of misconceptions about the benefits of international trade, the impact of trade policies, and the role and function of the World Trade Organization (WTO). Though the last few decades have been marked by a general reduction in trade barriers, the matter is not settled because the pressures to weaken the commitment to open markets never abate. The chapter emphasizes on difficult policy choices at the intersection of trade policy and climate change that could hold key battles over the world trading system in coming years. It also highlights the several benefits of world trade and the contribution of trade to the welfare and prosperity of billions of people around the world.