When or anyone unilaterally decides how something should be priced, you are dictating to everyone what they can and can't do, what they can and can't buy, what they do or do not want.
Labor and material cost are far from the only inputs into the price of something at any given place and time. What people are willing to pay tells manufacturers where and where not to invest and how much or how little of it to produce. Prices dictate profits and the potential for profits is the incentive for why a person or business makes something in the first place or looks for ways to make it better or cheaper.
Capitalism, in purely economic terms, is really just an acknowledgment that there is often an investment (capital) needed in order to make something or to offer a service for sake and that those who come with the investment (capital) should reap a reward for their investment.
Investment is simply savings, delaying current buying (consumption) in the expectation of having those savings work to give you more money in the future.
Free markets require the ability to invest, i.e. capitalism, but the reverse isn't necessarily true. Simply because you are allowed to invest, doesn't mean you are participating in a free market.
Free markets are what empower people to create opportunities for themselves, not some super-governmental body dictating prices and products. Countries do not trade. People trade. Businesses trade. Stop trying to interfere with their ability to do so in the way that each one of them decides is best for *them*.