Is international trade a prisoner\'s dilemma?

Arnold Kling quotes Clive Crook,

Liberal trade works exactly like a resource-saving technology. So, it makes exactly as much sense for a country to deny itself the advantages of open borders to trade as it would to deny itself the use of personal computers -- another disruptive technology that shares its gains unequally within and among nations. Where my analogy goes wrong is that each government has its own liberal-trade machine, which it can switch on independently if it chooses. No international agreement is needed for a country to unilaterally lower its tariffs or cut its farm subsidies. If it does this, most of the gains (lower prices, lower taxes) flow to its own citizens -- but there are benefits for foreigners, too. For the past five years, each government has been refusing to switch on its own machine unless other governments switch on theirs first. Why should the United States help Europe and Asia, if Europe and Asia won't help the United States? And vice versa. In the end, this week, the governments agreed that the easiest thing was to forget the whole idea. When you put it like that, it just sounds crazy. It is crazy. Nonetheless, this is precisely what happened.

(emphasis mine)

This is the same argument that Axelrod presented in The Evolution of Cooperation : trade as an example of the prisoner's dilemma. I didn't believe it then, and I don't believe it now.

How can a country's citizens suffer if their government says, "We'll trade with anyone willing. We don't care what the policies of any other government are"?

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