Most nations are today members of the World Trade Organizationmultilateral trade agreements. States can unilaterally reduce regulations and duties on imports and exports, as well as form bilateral and multilateral free trade agreements. Free trade areas between groups of countries, such as the European Economic Area and the Mercosuropen markets, establish a free trade zone among members while creating a protectionist barrier between that free trade area and the rest of the world. Most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes and non-tariff barriers, such as regulatory legislation.
Historically, openness to free trade substantially increased from 1815 to the outbreak of World War I. Trade openness increased again during the 1920s, but collapsed (in particular in Europe and North America) during the Great Depression. Trade openness increased substantially again from the 1950s onwards (albeit with a slowdown during the 1973 oil crisis). Economists and economic historians contend that current levels of trade openness are the highest they have ever been.[5][6][7]
Economists are generally supportive of free trade.[8] There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare while free trade and the reduction of trade barriers has a positive effect on economic growth[9][10][11][12][13][14] and economic stability.[15] However, in the short run, liberalization of trade can cause significant and unequally distributed losses and the economic dislocation of workers in import-competing sectors.[10][16][17]
^Murschetz, Paul (2013). State Aid for Newspapers: Theories, Cases, Actions. Springer Science+Business Media. p. 64. ISBN978-3642356902. Parties of the left in government adopt protectionist policies for ideological reasons and because they wish to save worker jobs. Conversely, right-wing parties are predisposed toward free trade policies.
^Peláez, Carlos (2008). Globalization and the State: Volume II: Trade Agreements, Inequality, the Environment, Financial Globalization, International Law and Vulnerabilities. United States: Palgrave MacMillan. p. 68. ISBN978-0230205314. Left-wing parties tend to support more protectionist policies than right-wing parties.
^Mansfield, Edward (2012). Votes, Vetoes, and the Political Economy of International Trade Agreements. Princeton University Press. p. 128. ISBN978-0691135304. Left-wing governments are considered more likely than others to intervene in the economy and to enact protectionist trade policies.
^Warren, Kenneth (2008). Encyclopedia of U.S. Campaigns, Elections, and Electoral Behavior: A–M, Volume 1. Sage. p. 680. ISBN978-1412954891. Yet, certain national interests, regional trading blocks, and left-wing anti-globalization forces still favor protectionist practices, making protectionism a continuing issue for both American political parties.
^See P.Krugman, «The Narrow and Broad Arguments for Free Trade», American Economic Review, Papers and Proceedings, 83(3), 1993; and P. Krugman, Peddling Prosperity: Economic Sense and Nonsense in the Age of Diminished Expectations, New York, W.W. Norton & Company, 1994.