How did modern free trade agreements develop as a response to major trade wars in history?

• A. They were designed to eliminate all forms of government intervention in domestic markets.
• B. They were established to reduce tariffs and prevent future trade conflicts by promoting cooperation among nations.
• C. They were created to increase protectionist policies and encourage countries to impose higher tariffs.
• D. They emerged to restrict international trade and limit the flow of goods between countries.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the historical context of trade wars, which involved countries imposing high tariffs and other barriers to protect domestic industries, often leading to retaliatory measures and economic conflicts.
2. Step 2: Recognize that modern free trade agreements were developed as a response to these conflicts, aiming to reduce tariffs and other trade barriers to promote smoother and more predictable international trade.
3. Step 3: Identify that the primary goal of these agreements is to foster cooperation among nations, thereby preventing future trade disputes and encouraging economic integration.
4. Step 4: Note that while free trade agreements reduce government intervention in the form of tariffs and quotas, they do not necessarily eliminate all forms of government involvement in domestic markets.
5. Step 5: Conclude that modern free trade agreements are designed to reduce protectionism and promote trade liberalization, contrasting with policies that increase tariffs or restrict trade.