An economist, as the joke goes, would say no: "If it were really a $20 bill, someone would have picked it up already." My father would say no, too, but for a different reason. True, he would say, you have no way of knowing who dropped the money. But the one thing you do know is it wasn't you. Whoever's $20 it may be, it isn't yours. Chew on that a while.

Last week's resolution of two long-standing trade disputes with the United States, one (lumber) in our favour and the other (wheat) in theirs, has prompted the usual suspects to question whether the North American free-trade agreement is worth the paper it's written on. Indeed, we cannot be sure that the Americans will not renew both fights at some later point.

The quick response is to point out that only a tiny fraction of our trade is in dispute. But, the critics might reply, the whole point of the rule of law, which such treaties were supposed to bring to international trade, is to deal with the exceptions. If the law against murder were not being enforced, it would be no defence to say that most people weren't murderers.

Which brings us back to the dilemma described above. The point my father was making - at least, I think this was his point - is that ethical behaviour ultimately depends not on fear of getting caught, or even on averting harm to another, but on the recognition of what is true and what is false. The only way you could pick up that $20 bill would be if you rationalized away the truth: It's not yours.

Conscience is that quality in us that, once we have grasped the truth, does not allow us to let it go. It is in conscience that our real safety lies. Though there is a law against murder, it could not be enforced were it not that most people aren't murderers: They couldn't do it, with or without a law, just because they know it's wrong. It is not rules, in short, that govern human behaviour, but will.

What is true of individuals is also true of governments. Friend or foe of free trade, it is a mistake to invest too much faith in the rules imposed by trade agreements. They help, certainly. But just as conscience is the one true guarantee of a civil society, so the only final assurance that the United States, or any other country, will live by the principle of free trade is if the people of that country and their representatives actually believe in it.

If, fundamentally, they do not, then it is no contest: Whenever rules and will conflict, it is will that prevails. This is the potential weakness in all such rules- based regimes. The postwar gold standard was supposed to be the rule that would prevent governments from inflating their currencies. It did, for as long as governments did not wish to inflate. When Richard Nixon wanted to inflate, he simply took the U.S. off the gold standard.

That isn't to say rules are of no value. Rules can teach; they can buttress will. Rules are especially useful amid the interest-group stampede that today masquerades as democratic politics, where the will of the majority is too often trampled underfoot. But they must in fact embody that will; they are no substitute for it. Although the rules-based approach to free trade, as negotiated through GATT and NAFTA, must on balance be rated a success, it is a dangerous path.

For negotiation suggests we are conceding something of value: that the only reason we should give up our trade barriers is so they will give up theirs. And so the game becomes to give up as little as possible. Yet as any economist will tell you, trade is one area where unilateral disarmament works. It is to our broad advantage to let imports compete freely in our markets, whether or not other nations reciprocate. By depending upon a rule to make us do what we should do anyway, we may undermine the will on which such a rule depends.

It needn't always be that way. The most important contribution rules can make may well be the very act of framing them. A society that collectively decides upon a rule, that debates the issue fully and commits itself to the result, will erect that rule upon the necessary foundation of will. That, arguably, is what we did in the 1988 free-trade election: More than any words on paper, it is our own commitment that binds us. That was our biggest gain from the agreement; anything we get from the Americans is gravy.