Written by: Beck

A problem Answerman has brought up repeatedly is that while two nations may both benefit from free trade, they do not necessarily benefit equally. This assertion is 100% true. In trade, the ratio of exchanged items isn't necessarily going to be Pareto optimal--a situation in which neither party can be made better off without making the other worse off. Both sides, naturally, will try to squeeze every last drop of blood out of the other's proverbial turnip, and at the end of the day, the party who comes out ahead more often than not is the best negotiator.

Governments often step in to try and swing things in favor of their nation's companies. This invariably leads to inefficiencies and lost economic gain for both parties. Yet while that is a problem, a far greater problem occurs when one side's government interferes and the other side's passively allows it to happen, doing nothing to thwart the interference. For this reason, tit-for-tat trade incentive/penalty programs and such tools as withholding Most Favored Nation trade status are valuable tools which the government shouldn't be too quick to surrender (those who've been keeping up with the comments threads on all these trade posts have already heard as much from me). The Clinton administrations push for Congress to make MFN status for China permanent was a horrible decision, and I don't think it's unreasonable to assume that Chinese contributions to the Clinton/Gore election campaigns played a significant roll in that decision.