One argument I often hear from free traders is that free trade is necessary because trading partners do not fight wars. Like every other argument for free trade, this argument is false and readily disproven by history. Consider the 10 largest US trade partners:
- South Korea
- United Kingdom
In 1931, Japan’s resources were inadequate, and its rural poverty became severe, so it invaded Manchuria, China to obtain natural resources. The US wanted to keep China free from Japanese control and was competing for natural resources—especially oil, rubber, and tin—from Southeast Asia, while at the same time Japan and the US had significant trade with each other.
In fact, during the Napoleonic Wars, France was Britain’s largest trading partner, which is why Napoleon attempted to create the Continental system to harm Great Britain.
Napoleon also attempted economic warfare against Britain, especially in the Berlin Decree of 1806. It forbade the import of British goods into European countries allied with or dependent upon France, and installed the Continental System in Europe. All connections were to be cut, even the mail. British merchants smuggled in many goods and the Continental System was not a powerful weapon of economic war. There was some damage to Britain, especially in 1808 and 1811, but its control of the oceans helped ameliorate the damage. Even more damage was done to the economies of France and its allies, which lost a useful trading partner.
In fact, Japan’s three largest trading partners, the United States, China, and South Korea, are also three of the very small number of countries against which it has waged war. Trade does not reduce the likelihood of war, to the contrary, the stresses it necessarily causes the relationship between to countries tends to increase the probability of war taking place.