ABSTRACT
Internal protection means that foreign economic policy remains a domestic issue. Once trade barriers became negotiable, the various national foreign economic policies became intertwined. International trade policy is most effective if it concentrates on trade in manufactures. Across-the-board tariff reductions were an international trade policy response to the rise in intra-trades. Although international trade policy followed the needs of intra-trades, economic policies often continued as if this was still a world of inter-trades. Intra-trade itself was an unforeseen result of the multilateral reduction of trade barriers. Remedial measures were designed to improve the performance of the inter-trades in what was thought to be a price competitive world. Inter-trades are trades where most production takes place under conditions of decreasing returns. A price competitive free market then gives producers an adequate return to keep capital intact but not enough to finance expansion of their activities.
