What is free trade?

Chinese consumers queue for GE-Free produce and information being distributed by Greenpeace at a Guangzhou supermarket.

The act of opening up economies is known as "free trade" or "trade liberalisation." It usually benefits the larger, wealthier countries whose big companies are looking to expand and sell their goods abroad. In the one sector where developing countries have the most to gain - agricultural goods - wealthier countries maintain the highest level of "protection" of their own markets.

Globalisation has made the world a much smaller place. Global trade refers to the act of buying and selling goods and services between countries. Today these goods and services can travel further and faster so that - for instance - products from all over the world can be found at your corner shop. This can be anything from fruits and vegetables, to cars, banking services, clothing, and bottled water.

The scale and pace of this kind of trade has only increased over time, and has become a very powerful tool. International trade is considered a prime driver of how well a country develops, and affects very much how well the economies of different countries are doing.

Free Trade - who is paying the price

The act of opening up economies is known as "free trade" or "trade liberalisation." Trade liberalisation means opening up markets by bringing down trade barriers such as tariffs. Doing this allows goods and services from everywhere to compete with domestic products and services.

But in practice the set-up of global trade rules and the way these are administered by the World Trade Organisation, works best for those countries who are already rich, and increases the gap between them and poorer countries who are already struggling to compete.

When trade is a weapon - tariffs and subsidies

Part of the problem is that trade is not always equal. It is not just a tool - it can also be a weapon. When countries put restrictions, such as tariffs, on goods from other countries, imported goods become more expensive and less competitive than goods from their own country.

Another thing that can be done is subsidising domestic businesses. This means that governments give money or other forms of support to local or domestic businesses, to make sure that they are cheaper over imported products and services. This can allow unsuccessful and inefficient businesses to do well, since they receive all kinds of government support. And while these businesses continue to grow, smaller or local producers, especially in many poorer countries - those that need support the most - are being destroyed.

Any measure like this is called "protectionist," since it has the effect of closing off a country's markets to goods from other countries. Many wealthy countries in Europe, as well as the US and Japan use these tactics to support their own domestic economies, making it impossible for smaller, or less developed countries to gain a foothold in the global marketplace.

As they go about protecting and closing off their own markets, many of these very same countries are creating double standards, by forcing other countries to open up their markets.