A little thought experiment on fair trade: Suppose there are two countries, A and B. A has a competitive advantage at making a. B has a competitive advantage at making b. Neither has any tariffs, so A makes its own a and buys b from B. B makes its own b and buys a from A.
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B, having developed competitive advantage in a and b, declares that it is for free trade once again and removes the tariff on imports of a into B. A and B are trading freely. B is a developed manufacturing nation, while A is a supplier of natural resources to B.
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