Balanced trade is an alternative economic model to free trade. Under balanced trade nations are required to provide a fairly even reciprocal trade pattern; they cannot run large trade deficits. If deficits appear, the surplus nation must find a way to balance out trade or risk sanctions, fees, or quotas.
It is true that some deal-making between countries that want to export to a given target country may be needed in order to "trade" trade opportunities. This is somewhat similar to the "pollution credits" used by some industries to stay within regulatory environmental compliance, but still have flexibility to reallocate resources.
Balanced trade policies can allegedly reduce "bumpy" changes, economic bubbles, and sudden corrections. In theory, balanced trade does not significantly reduce total trade compared free trade because trade deficits cannot last forever anyhow. The theory is that it provides a smoother path to the inevitable.
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Last updated: 08-23-2005 03:32:34
