Why Free Trade Remains The Superior Alternative To Protectionism
If the goal is to make our manufacturing sector more competitive, domestic labour policy cannot be ignored.
One important point that Free Market Foundation (FMF) Senior Associate Dr Morné Malan makes in his latest paper on international trade is that trade, much like economic growth, is not a zero-sum game that only benefits China - as US President Donald Trump would have people believe. This is the kind of thinking that still drives protectionist policy across the globe, and it needs to be challenged.
It dates to the era of mercantilism in Europe, when the belief was that a state’s wealth depended solely on how much gold or silver it could accumulate, and that this could only be achieved by maximising exports and aggressively limiting imports. Wealth, the argument went, was fixed, and only a favourable balance of trade was considered ideal.
It wasn’t until Adam Smith and others came along that this logic was severely undermined and discredited as the hogwash it was. Smith’s first important insight was that a state’s wealth lay not in reserves of gold or silver, but in its ability to produce certain goods and services.
This insight naturally undercut the impulse to maximise exports and restrict imports. It also fed into David Ricardo’s theory of comparative advantage, which argued that states benefit by producing goods and services where they face a lower opportunity cost. Even if that advantage isn’t absolute, simply being relatively better at it still provides gains.
The idea was that through specialisation a country could produce more goods and services and then trade with others for what it doesn’t produce itself. The outcome would be a more prosperous and peaceful world, where the pursuit of zero-sum outcomes no longer led to unnecessary conflict.
While Smith and Ricardo presented these ideas centuries ago, they remain crucial for showing why protectionism is neither a sensible nor effective trade policy.
On its own, protectionism carries several drawbacks: higher prices for consumers in the absence of competition, inefficient industries that never gain strength through rivalry, and trade disputes that are triggered by retaliation from other states.
When combined with its cousins – revenue generation and geopolitical strategy – protectionism is even more self-defeating because it clashes with them. If you want to protect your industries, you must restrict imports and undermine the very revenue you claim to want. Likewise, you cannot make other states dependent on your industries if you shield them and prevent them from becoming globally competitive.
As appealing as it sounds, protectionism simply doesn’t deliver the outcomes it promises. Free trade on the other hand - with all its imperfections - still offers a more viable path to shared prosperity and global stability.
When a country stops obsessing over being “ripped off” and focuses on producing what it has a competitive advantage in, the results improve across the board. Citizens benefit from lower prices, industries become stronger through exposure to competition, export opportunities grow, and conflict with other states is minimised. Taken together, these effects create real and lasting benefits.
In South Africa’s case, concerns about job losses linked to free trade are understandable, but their causes are often misunderstood. China’s industries are far more competitive because of lower labour costs and higher productivity. No amount of protectionism will change this. If anything, shielding our industries has left them even less competitive in the global market.
If the goal is to make our manufacturing sector more competitive, domestic labour policy cannot be ignored. We will not match China until we are willing to take the bold steps it took before becoming the factory of the world.
On a broader scale, rejecting protectionism and embracing free trade is the wiser path. By focusing on what we have a genuine advantage in and making our industries globally competitive, we can create the jobs our country desperately needs.
Trump’s approach to trade is not rooted in economics. His policy is purely political, aimed at gaining leverage over China, and as events show, he remains the real loser in the game.
Wealth has never been distributed equally and it shouldn't be. Our focus should not be on enforced equality, but on creating opportunities for all. Free trade, when done properly, remains the superior system because it allows every country to generate wealth and share in the benefits of global commerce.
Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.
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