Free trade is a practical concept based on fundamentals of Economics: There is no evidence to support that free trade is practically possible. Fundamental economics talks about demand and supply equilibrium, which is supposed to be brought about by the invisible hand spoken of by Adam Smith.

But the essential assumption for such equilibrium is the existence of several buyers and several sellers. Unless you have many players, equilibrium will not arrive. Now in real world, there are not 'many players' actually playing the game. For example, see UNDP Human Development Report 1999, which estimates that top 10 pesticide companies in the world control 85% of the $31 Billion market. Top 10 telecom companies control 86% of the $262 Billion market. Similar point can be noted about top computer companies. Mergers are a fact of corporate life, which leads to monopolies or oligopolies, which are not characteristics of free trade. In many Indian villages, the farmers can sell their paddy to only one miller agent and at most to two. Thus there are many practical situations where there are only a few buyers or only a few sellers.

* Free trade leads to efficiency This is almost taken as a tautology. But if we see a little carefully as to how efficiency is actually defined in adopting this view, things will be clear. Efficiency is seen strictly with reference to costs or input as compared with income or output. This output is defined in the narrowest possible sense by referring to the particular industrial unit or enterprise. If the unit transfers its costs by passing on to others, it automatically becomes efficient by this definition. For example, a unit reduces its costs by discharging industrial effluents into a river. It may result in much more troublesome social and environmental costs. Mostly it does. But the cost transferred to society is not considered in such analysis. Another example of how waste is encouraged in the name of free trade is the way advertisements affect the whole business. There are certain products where the cost of advertisement is more than 50% of the price. Cost of packaging is more than 50% of price. OK, it is good news for the packaging and advertisement sector. But if you see the society as a whole, surely it is a waste to have such high costs incurred in style rather than substance.

* Free trade is practised throughout the western world: Nothing can be farther from truth than this statement. When it comes to the inter-relationships between exports and imports, there is always doublespeak. There have been several instances when the west has tried to impose tariff barriers on products that are considered threatening to domestic industry. Just examine why they have limit on number of H-1 visas in the USA. If free trade is the objective, why not allow every skilled person to offer his or her services to them, whether the person is from Asia or Africa or Europe. Why are ceilings put, if not to protect the domestic manpower within their own countries? Similarly the bogey of child labor is invoked when it means protecting domestic carpet industry.