Balanced trade

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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.

The concept of Balanced Trade arises from an essay by Michael McKeever Sr. of the McKeever Institute of Economic Policy Analysis. According to the essay, "BT is a simple concept which says that a country should import only as much as it exports so that trade and money flows are balanced. A country can balance its trade either on a trading partner basis in which total money flows between two countries are equalized or it can balance the overall trade and money flows so that a trade deficit with one country is balanced by a trade surplus with another country." [1]


A more extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. "A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance." [2]

Balanced trade has been advocated by Warren Buffett, who suggested a system of "Import Certificates" (ICs) – exporters would receive $1 of ICs for each $1 of goods they exported, and importers would be required to present $1 of ICs for every $1 of goods they import. This would limit the value of imports to at most the value of exports (and presumably exactly the value of imports, assuming no leakage), and create a market of exporters to sell ICs to importers, effectively subsidizing exporters and taxing importers – compare cap and trade.[3][4]

In the United States, the idea was first introduced legislatively in the Balanced Trade Restoration Act of 2006. The proposed legislation was sponsored by Senators Byron Dorgan (ND) and Russell Feingold (WI), two Democrats in the United States senate. Since then there has been no action on the bill.

See also[edit]


  1. ^ McKeever, Sr, Michael (1996). Balanced Trade: Toward the Future of Economics. McKeever Institute of Economic Policy Analysis. Retrieved 2008-04-16. 
  2. ^ Richman, Raymond; Howard Richman and Jesse Richman (2008). Trading Away Our Future. Ideal Taxes Association. Retrieved 2008-04-22. 
  3. ^ Buffett, Warren E. (November 10, 2003). "America's Growing Trade Deficit Is Selling The Nation Out From Under Us. Here's A Way To Fix The Problem–And We Need To Do It Now.". Fortune. 
  4. ^