What does free trade mean?

• A. The exchange of foods and services between countries without tariffs or government intervention to control trade or protect domestic industries
• B. Trade between countries with tariffs to protect domestic industries
• C. The exchange of only goods, not services, across borders
• D. Government intervention is required to regulate trade

Answer: (A)

Free trade is about allowing international exchange of goods and services with as few government barriers as possible. When tariffs are removed and there are no policies designed to shield particular industries, markets compete on price and efficiency. That’s why the statement describing trade without tariffs or government intervention to control trade or protect domestic industries best captures the idea of free trade. In practice, removing barriers can lower prices for consumers and expand choices, though some sectors may adjust as competition increases. The other ideas describe protectionist rules (tariffs), restrict trade to goods only, or require government regulation—none of which align with free trade. For Canada, these concepts underpin major moves like the Canada–United States Free Trade Agreement, which aimed to reduce barriers to cross-border commerce.