Communications of the ACM

Vviewpoints

with secure local resources, trade surplus, and the accumulation of precious metals, particularly gold and silver in the form of bullion. Consequently, they regarded international trade as a zero-sum game.

Against this historical backdrop, the free trade system held together by multiple sovereign nation-states, as we know it today, is a 20th-century creation. The Great Depression in the 1930s led to protectionist moves by major industrial nations. But thereafter, the General Agreement on Tariffs and Trade (GAT T) since 1948 and the World Trade Organization (WTO), which superseded GATT in 1995, facilitated significant reductions in quotas and tariffs. Consequently, international trade in merchandise surged to 17 trillion USD in 2017. Moreover, much of this volume is accounted for by trade in intermediate goods. This is a manifestation of the rise of global supply chains in a variety of assembly-based manufacturing

A SPECTER IS HAUNTING the globe—a specter of neo- nationalism and protec- tionism. But not all the global powers are united in an alliance to exorcise this specter, because its lead conjuror is the U.S.— the largest economy in the world. U.S. protectionism was presaged by an ironic juxtaposition at the World Economic Forum in January 2017, when China’s President Xi Jinping championed the cause of a liberal economic order in contrast to President Trump’s America First stance. Why has the world moved toward protectionism, and what is its impact on businesses and consumers? And how damaging is this phenomenon to our prosperity? This column considers what free trade has meant, and the impact of its demise.

This topic is particularly important
to people involved in computing in an
increasingly digital world. The history
of free trade centers around non-dig-
ital goods and services, given the rela-
tively late arrival of digital and digitally
traded goods and services. That history
helps explain the issue and draw impli-
cations for the digital world.

History of International Trade Trading has a very long history underpinning ancient civilizations that thrived in Egypt, Greece, and Rome. Later, merchants in Venice and elsewhere traded by sea, but also along the Silk Road connecting China to the Middle East and the West. It was not until the 18th century, however, that the economists Adam Smith and David Ricardo articulated the modern notion of freedom of commerce and freedom of the seas. By then, the Dutch and the British, among other sea powers, cultivated colonies, and fueled a fierce debate between mercantilists and free traders, a debate that lasted well into the late 19th century. Mercantilists believed strong nation-states had to be self-sufficient

Technology Strategy
and Management
Free Trade in
a Digital World

Considering the possible implications for free trade, traditionally based on non-digital goods, for a modern global economy that is increasingly based on intangible products and services enabled by digital technologies.