Part of the basis for the idea of free trade was enunciated by Adam Smith in the opening to his Wealth of Nations "The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour." When individuals specialize it raises overall productivity. International trade enables the benefits of the division of labour to be reaped on a global scale. But nations also benefit from what Ricardo termed 'comparative advantage'. When nation A is more efficient in, for example, producing both television sets and cars than nation B, the benefits of specialization can still occur. Nation A can prosper by specializing in, for example, cars and then trading with Nation B for television sets even though nation A is more efficient at producing both. That is to say by specializing in only cars and trading for television sets nation A will end up with more cars and television sets than if they were all produced domestically (as, for that matter, will nation B).
In more recent years governments have been trumpeting so called 'free trade agreements' ostensibly to reduce tariffs or other barriers to trade. Given the importance of trade and the historical success of the free trade movement it is tempting to laud these arrangements but unfortunately as is often the case in politics not everything which is called free trade is actually free trade. Agreements like NAFTA could more appropriately be considered 'managed trade' and these agreements can sometimes leave the Canadian taxpayer on the hook for a lot of money when they enable super rich foreigners like Matty Moroun to sue our government. Moroun, who owns a bridge connecting Windsor to Detroit, is suing the Canadian government for 3.5 billion dollars on the basis of NAFTA provisions which state his company must be treated no differently than a Canadian firm. This is hardly the only case of a business using NAFTA to sue the Canadian government; over $170 million in damages has already been paid out to foreign interests under the Investor-State Dispute Settlement (ISDS) Mechanism.
We should welcome foreign investment in our shores. We should pursue an aggressive strategy of unilateral free trade. But our government should not be shelling out big bucks to foreign oligarchs under shoddy pretexts.