FREE-TRADE - OLD AND NEW CHALLENGES

The paper analyses the old and new challenges to the theory and policy of Free Trade. The old challenges have sought to undermine the case f or Free Trade by citing one or another type of market imperfection. Th us, the postwar period has seen two such challenges: factor market imp erfections were analysed in the 1950s to 1970s, product market imperfe ctions in the 1980s. The new challenges are twofold. One comes from th e demands for Fair Trade as a precondition for Free Trade; the other, from the concern that Free Trade, while efficient, immiserises the uns killed in the richer countries.