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A common argument is that free trade is desirable only if all countries play by the same rules. If firms in different countries are subject

A common argument is that free trade is desirable only if all countries play by the same rules. If firms in different countries are subject to different laws and regulations, then it is unfair (the argument goes) to expect the firms to compete in the international marketplace. For instance, suppose that the government of Neighborland subsidizes its textile industry, thus lowering the costs of production for Neighborland's textile companies. The Isolandian textile industry might argue that it should be protected from this foreign competition because Neighborland is not competing fairly.

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