Evolution of Trade Law
One of the earliest known forms of international trade involved the Great Silk Road. This trade route comprised of countries from Europe who were trading with the civilizations found in the Far East. These civilizations included Ancient China and the Mongolian Empire (Hauser & Roitinger, 2004). The goods that were traded from Europe were agricultural products such as wheat, cotton, and barley while the main product received from the Far East was silk made by the silkworm. This silk was a coveted material used to make the clothes of the very wealthy individuals in the European societies. These problems led to the Age of Exploration. One of the first empires to attempt significant progress in exploration were the people from Ancient China. This civilization managed to traverse the Indian Ocean so that they could trade with the East African region.
These Chinese traders managed to travel as far north as to Ancient Egypt where they traded with some of the pharaohs who were instrumental in the building of most of the pyramids that are in existence even today. However, the Empire of Portugal sought to find a direct sea-route to India since the journey on land was costly and also hazardous (Goldstein, Rivers & Tomz, 2007). As soon as the Europeans began to migrate to this region, large-scale production of cash crops started. These crops included cotton and sugarcane (Goldstein, Rivers & Tomz, 2007). However, the availability of land was higher than the labor force. Hence, the slave trade started. Slaves were transported from the African continent to work in these plantations. Despite the fact that almost everyone buys and sells, this situation only makes one a small part of the entire sector of study.
Thus, every individual comprises the full scope of economics (Suranovic, 2010). Due to the complexity of the entire scope of economics, numerous scholars have developed models and other algorithms that try to describe different aspects of the global economy. However, without understanding the actual conditions of the market in different parts of the globe, these models and equations tend to be inconsistent with the results. Thus, the nature of the environment must be defined from a practical stance before any theoretical formulas can be applied by an economist (Suranovic, 2010). Figure 2: International Exports as a Percentage of the Global GDP (Suranovic, 2010). These figures indicate that the international trade has been growing over the last 4 decades. Even with a few fluctuations in the graph, the rise of the figures are easily discernable.
This situation shows how international economics is vital to any business venture (Suranovic, 2010). Additionally, foreign direct investment (FDI) is a critical part of the international trade. This system imposed levy fees on any product imported from a foreign nation. Thus, the charges varied greatly where some countries had low tariff fees while others charged highly. The number of fees charged also differed depending on the trading agreements that two countries had with one another. This trade tariff was one of the simplest ways through which countries could obtain revenue (Staigger, 1995). The amount of tax imposed on the imported goods determined the tendency of the foreign traders to send their products into the region as well as the cost of the product when it hits the market.
Despite the apparent simplicity of the GATT’s agenda, the full implementation of the proposal took almost five decades (Amadeo, 2017). The primary issue was to make every country in the world to accept the terms for the reduction of the import duty fees. However, before any country could accept such terms, the condition was that other nations, especially the neighboring ones, had to also lower the same charges on the tariff (Amadeo, 2017). This condition ensured that the progress took longer than necessary since Uruguay was the last nation to comply with the terms of the GATT in 1994. However, all the countries that joined the same organization had to be treated equally regardless of their economic power. This committee was called the World Trade Organization (WTO) and its purpose was to ensure the freedom of trade based on the agreements agreed upon from GATT while also resolving any trade conflicts that can occur among different countries (VanGrasstek, 2013).
World Trade Organization (WTO) According to Craig VanGrasstek (2013), the World Trade Organization was a conceptualization birthed from numerous debates and discussions. The basis for the establishment of the WTO was to accept that every nation had its own interference from any international influence. Additionally, the same country had a duty to respect the sovereignty of other foreign countries and by getting into trade agreements with such nations, the country had to honor such deals (VanGrasstek, 2013). However, this mere assumption was not as easy to carry out. The establishment of the WTO was not an endeavor which started from scratch. It was a project that began more than fifty years before when the GATT was being formed. Thus, the ideas and principles on international trade developed over time until in 1994 when the need to create an actual organization with legal jurisdiction at an international level (VanGrasstek, 2013).
The WTO adopted the rules and regulations from multiple organizations and international laws over a span of five decades. This measure ensured that the consolidated data will cover all aspects of global trade. Prior to the formation of the General Agreement on Tariffs and Trade, most countries were charging different costs on the fees levied upon goods which were imported. These charges depended upon the relationship between the trading countries as well as the economic development of the nations (Amadeo, 2017). However, GATT ensured that every member state could trade with other member states from an equal platform. This move guaranteed that the economy of the entire globe could improve since any nation could participate in the international trade without risking losses.
Trade laws have helped to reduce completion among countries when it comes to exports of certain goods. This collaboration ensures that there is a platform where nations can petition cases on trade disagreements. The formation of the World Trade Organization helped to create this situation and now the least developed countries have laws which protect their trading rights and their economic revenue (VanGrasstek, 2013). Finally, the evolution of the trade law led to the creation of organizations such as the World Bank and the International Monetary Fund. These two organizations have been instrumental in the provision of funds to the needy as well as offering credit to nations that are struggling economically (Amadeo, 2017). Without international trade laws, such accomplishments would be difficult to attain.
Gaining the benefits from the free trade agreement mandated that countries had to revoke some of the government policies they applied (Langille, 2011). In India, for example, the administration had allowed local pharmaceutical companies to manufacture generic drugs without the requirement of a license. This strategy not only improved employment rates but also ensured that the citizens had access to cheap medicine (Langille, 2011). However, the condition for joining GATT required that these companies have a license which led to costlier drugs. Conclusion From the findings of this research report, it is apparent that the trade laws have been pivotal to the transformation of the lives of people. Goldstein, J. L. , Rivers, D. , & Tomz, M. Institutions in International Relations: Understanding the Effects of the GATT and the WTO on World Trade.
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