This view became popular for the first time in 1817 by the economist David Ricardo in his book On the Principles of Political Economy and Taxation. He argued that free trade broadens diversity and reduces the prices of goods available in a nation, while making a better part of its own resources, knowledge and specialized skills. The concept of free trade is the opposite of trade protectionism or economic isolationism. In the modern world, free trade policy is often implemented by a formal and reciprocal agreement between the nations concerned. However, a free trade policy may simply be the absence of trade restrictions. Governments with free trade policies or agreements do not necessarily abandon import and export controls or eliminate all protectionist policies. In modern international trade, few free trade agreements lead to completely free trade. However, it is unlikely that trade in financial markets is completely free in this day and age. There are many supranational regulatory bodies for global financial markets, including the Basel Committee on Banking Supervision, the International Organization of the Financial Markets Authority (IOSCO) and the Committee on Capital Movements and Invisible Transactions. Unsurprisingly, financial markets see the other side of the coin. Free trade is an opportunity to open up another part of the world to local producers. Free trade policy has not been as popular with the general public. Key issues include unfair competition from countries where lower labour costs are reducing prices and the loss of well-paying jobs for producers abroad.

Together, these agreements mean that about half of all goods entering the United States enter duty-free, according to the government. The average import duty on industrial products is 2%. There are currently a number of free trade agreements in the United States. These include multi-nation agreements such as the North American Free Trade Agreement (NAFTA), which includes the United States, Canada and Mexico, and the Central American Free Trade Agreement (CAFTA), which includes most Central American nations. There are also separate trade agreements with nations, from Australia to Peru. The United States has begun negotiating bilateral and multilateral free trade agreements with the following countries and blocs: here is a list of free trade agreements that include the United States. In parentheses, the abbreviation, if any, membership, unless indicated in advance, and the date of entry into force. For example, a nation could allow free trade with another nation, with exceptions that prohibit the importation of certain drugs not authorized by its regulators, animals that have not been vaccinated, or processed foods that do not meet their standards.