Friedrich List’s Critique of the Methuen Treaty

Abstract

This article examines Friedrich List’s critique of the Methuen Treaty. The Methuen Treaty removed all restrictions on English wool entering Portugal and reaffirmed England’s commitment to import Portuguese wines at two-thirds the tariffs of French wines. Friedrich List argues that the agreement hurt Portugal’s textile industry and slowed Portugal’s economic growth. List’s critique of the Methuen Treaty is a strong representation of his resistance to Adam Smith and Jean-Baptiste Say, but it is isolated from his robust theoretical framework. One possible explanation for the discontinuity is that the knowledge problem undermines List’s theory. The lack of local data makes it difficult to conduct an accurate and straightforward policy analysis of the Methuen Treaty, making the analysis vulnerable to normative interpretations. Specifically, List’s disagreement with Adam Smith’s cosmopolitanism pushed him further away from a straightforward application of his theory.