This Article is written by Thuraya Hatim of University of Khartoum, an intern under Legal Vidhiya
Abstract
Due to globalization and other factors, international trade law has developed and continues to grow. As a result, the World Bank, the General Agreement on Tariffs and Trade (GATT), the United States, and Canada established the World Trade Organization (WTO) in 1995. Additionally, bilateral treaties that organized Trade between nations were established, such as the North American Free Trade Agreement (NAFTA), which was established in 1994 with the goal of facilitating Trade between the parties. NAFTA was eventually replaced by the United States-Mexico-Canada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The Code of Hammurabi dates back to 1754 BCE, the Silk Road, the mercantilist and colonialist periods, and the digital age in which we currently live are the starting points of the history of international trade law.
Globalization and international Trade have brought benefits to the world, such as the growth of the economy, the elimination of trade barriers between countries, and the emergence of fresh trade patterns that have significantly impacted international trade regulations. However, they have also raised challenges like environmental concerns and sustainability problems.
Keywords
Globalization, International Trade Law, World Trade Organization, Economic, Free Trade, Protectionism.
Introduction
The exchange of commodities and services through sales is referred to as Trade. International Trade, a tradition as old as nation-states themselves, is this commercial interaction that occurs outside national borders. Historical evidence connects collectivizes like tribes, city-states, or other political entities to international Trade. The phrase “world trading system” refers to the current configurations of global trade relations, particularly the multilateral rules framework that emerged in the middle of the 20th century in the wake of two major world wars and a worldwide economic downturn.
The increasing integration of Trade, people, finance, and ideas in one global marketplace results in the growing interdependence of countries, known as globalization. The main elements of this global integration are international Trade and cross-border investment flows, which means that globalization and international Trade affect each other.
Because of the evolution of international Trade, several bodies and treaties were created, such as the International Monetary Fund (IMF), the General Agreement on Tariffs and Trade (GATT), the World Bank, and finally, the World Trade Organization (WTO), which was created in 1995.[1]
The process of developing international trade law in the context of globalization is complex and ever-changing, reflecting the shifting nature of international economic exchanges. A comprehensive comprehension of this evolution can be attained by examining critical phases and breakthroughs that have shaped the present condition of international trade law. Benefits from globalization included the expansion of international Trade and the growth of the economy, as well as the creation of international trade law. Undoubtedly, issues like sustainability and environmental concerns have had an impact on the growth of international Trade.[2]
Historical Background of International Trade Law
Ancient Trade: The origins of International Trade can be found in ancient history, as various civilizations sought goods and resources that were not accessible in their local regions. As early as 3000 BCE, the Mesopotamians, Egyptians, and Phoenicians established trade networks to facilitate the exchange of items like spices, textiles, metals, and agricultural products. Evidence of early trade regulations and practices can be seen in the Code of Hammurabi, which dates back to 1754 BCE.
Silk Road Ancient: During the Han Dynasty in China (206 BCE—220 CE), the Silk Road, one of history’s most famous trade routes, came into existence. This extensive network, spanning more than 6,000 miles, enabled Trade between Asia, Europe, and Africa, fostering the exchange of valuable commodities like silk, spices, precious metals, and cultural concepts. Individuals such as Zhang Qian, a Chinese diplomat and adventurer, played a crucial role in expanding and establishing this trade route.
Age of Exploration: From the 15th to 17th centuries, global trade routes increased significantly due to the Age of Exploration. Explorers from Europe, including Christopher Columbus, Vasco da Gama, and Ferdinand Magellan, set out on journeys to find new trade paths to Asia and new territories. These expeditions resulted in the creation of trade connections and settlements, allowing for the interchange of products, materials, and cultural impacts across different continents.
Mercantilism and Colonialism: In the 16th to 18th centuries, mercantilism rose as a prevailing economic ideology. European nations sought to amass wealth through advantageous trade balances. The establishment of colonies globally was crucial in this endeavor, enabling European powers to ensure a steady supply of raw materials, create markets for their manufactured goods, and control Trade. The formation of the British East India Company in 1600 solidified its influential role in global Trade, especially in Asia.
Industrial Revolution: The Industrial Revolution lasted from the 18th to the 19th centuries and ushered in significant transformations in global Trade. Innovations such as the steam engine, mechanization, and upgraded transportation systems made large-scale production and international Trade possible. The introduction of telegraphy improved long-distance communication and coordination, thereby further expediting trade and business activities.
Post-World War 2: After World War II, there were global initiatives to encourage cooperation in international Trade. Formed in 1947, the General Agreement on Tariffs and Trade (GATT) sought to lower trade barriers and stimulate economic development. In 1995, the GATT transformed into the World Trade Organization (WTO), which is responsible for supervising trade accords and settling disputes between member countries. The WTO has been crucial in nurturing a structured global trading system.
Digital Era: The digital revolution of the late 20th and early 21st centuries has transformed international Trade. The Internet and e-commerce platforms have revolutionized how businesses carry out cross-border transactions. For example, Jack Ma’s Alibaba Group has enabled global Trade by creating an online marketplace that brings together buyers and sellers from various parts of the world. Global supply chains are now intricately linked, allowing for the efficient production, distribution, and consumption of goods.[3]
International Trade Law Bodies and Treaties
Because of the expansion of international trade, international treaties and bodies needed to be created, and rules that controls trade between countries and Sanctions must be applied to countries that commit crimes to harm other countries in the field of Trade.
The General Agreement on Tariffs and Trade (GATT) was established by the United Nations General Assembly in 1947 in the wake of World War II. Its goal was to lower tariffs and other trade barriers, such as establishing regulations for free Trade. In 1995, the General Agreement on Tariffs and Trade (GATT) gave way to the World Trade Organization (WTO), an advanced and inclusive organization.
World Trade Organization (WTO) was different from The General Agreement on Tariffs and Trade (GATT) in some points like; it included not only Trade of goods but also the Trade of services, all agreements were binding and multilateral, it also adopted The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as a legal instrument to protect the intellectual property on the international trade space, added to that The Dispute Settlement Body (DSB) of the WTO oversees the process of resolving disputes, which includes discussions, decisions made by panels and the Appellate Body, and enforcing judgments. This process guarantees that trade disagreements are addressed in line with set rules and contributes to upholding a consistent and rule-based system for Trade.
There were also bilateral treaties that organized Trade between countries, like the North American Free Trade Agreement (NAFTA), which was created in 1994 between the United States, Mexico, and Canada. The aim of the agreement was to smooth the Trade between the countries of the agreement. It was replaced by the United States-MexicTradeada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).[4]
Globalization and International Trade
Globalization can be traced back to two waves:
The First Wave of Globalization: The first wave of globalization started in the nineteenth century and ended after World War 2 when the second wave started.
World War I ended this first wave, as liberalism’s refusal and nationalism’s growth caused international Trade to slump.
The Second Wave of Globalization: This wave was specialized by technology. The substantial increase in global Trade following World War II was made feasible largely due to decreased transaction costs resulting from technology, including the advancement of commercial air trade, enhanced efficiency in merchant shipping, and the widespread adoption of the telephone as the primary means of communication. The visualization illustrates the consistent decline in costsTradeciated with these three factors on a global scale since 1930.
During the first wave of globalization, there was a prevalence of inter-industry Trade, where countries traded goods that were dissimilar to what they imported – for instance, England traded machines for Australian wool and Indian tea. This pattern shifted as transaction costs decreased. In the second wave of globalization, there has been an increase in intra-industry Trade, which involves the exchange of similar goods and services. For instance, France now both imports and exports machines to and from Germany.[5]
Advantages and Disadvantages of the Evolution of International Trade Law in the Context of Globalization
Globalization has affected every aspect of our lives, but one of the key areas is international Trade. It has revolutionized the ways businesses and Trade are conducted by states, which has resulted in the development of international trade law.
First, as a result of globalization, Trade expanded globally, providing more economic prospects for the participating countries. Markets have been opened, and trade obstacles have been removed, allowing countries to benefit from a more fantastic range of global goods and Trade services sequentially; there is now more competition, which benefits customers by increasing choice, lowering costs, and improving efficiency. These transactions are made possible by the existence of international trade law, which provides a framework for the rights, duties, and rules that are contravened between countries.
Moreover, the globalization phenomenon has resulted in the emergence of fresh trade patterns that have significantly impacted international trade regulations. A significant trend in this regard is the increase in global value chains (GVCs), which involves the dispersal of production processes across multiple countries, with different stages of production occurring in different nations. This trend has made the traditional concept of international Trade more complex, as it now encompasses not only the Trade of finished products but also trades and services. Consequently, international trade must adapt to this new reality by addressing issues concerning intellectual property rights, investment protection, and the traditions of workers in the various countries involved in GVCs.
However, due to globalization’s impact, international trade law faces challenges. One key challenge is the increasing opposition to globalization and the reemergence of protectionist tendencies in certain countries. This can result in the implementation of trade barriers, tariffs, and other restrictive trade measures, which contradict the principles of free and open Trade upheld in international trade law. Balancing the advantages of globalization with addressing strategic issues has become an increasingly difficult task for policymakers and trade negotiators.
In addition, the swift progress of technology in the age of globalization has presented fresh obstacles for international trade law. The digital economy, online commerce, and international data transmission are transforming the global trade environment. Adapting to technological advancements is essential for international trade law to effectively safeguard intellectual property rights, privacy, and cybersecurity in the digital era.[6]
Conclusion
To conclude, the impact of globalization on international trade law has been significant, bringing about both trends and challenges. This has changed how countries engage in business and Trade, leading to the adaptation of international trade law to address new issues such as global value chains and environmental matters. Nevertheless, obstacles such as protectionism and rapid technological advancements need to be overcome. Globalization continues to affect the global economy; it is essential for international trade law to remain flexible, responsive, and fair to ensure that all countries enjoy the benefits of global Trade.
International trade law has evolved within the context of globalization, demonstrating the changing priorities and challenges of the global economy. It originated from bilateral treaties and has adapted to the evolving demands of the global trading system, culminating in the establishment of the WTO. As globalization progresses, legal frameworks governing international Trade will also evolve, aiming to strike a balance between economic growth and social, environmental, and technological factors.
References
- Eiselen, S. Globalization and Harmonization of International Trade Law. In Globalization and Private Law, Cheltenham, UK: Edward Elgar Publishing. available from: < https://doi.org/10.4337/9781849805216.00012> [Accessed 31 August 2024]
- Magazine, C., 2023. The Impact of Globalization on International Trade Law: Trends and Challenges [WWW Document]. Court Magazine. URL https://www.courtmagazine.org/post/the-impact-of-globalization-on-international-trade-law-trends-and-challenges (Accessed 30 Aug 2024)
- Nina, E., 2023a. The Evolution of International Trade: A Historical Overview [WWW Document]. International Trade Council. URL https://tradecouncil.org/the-evolution-of-international-trade-a-historical-overview/ (Accessed 1st Sep 2024)
- Ortiz-Ospina, E., Beltekian, D., Roser, M., Trade and Globalization [WWW Document]. Our World in Data. URL https://ourworldindata.org/trade-and-globalization#trade-has-changed-the-world-economy (Accessed 31 Aug 2024)
- Winham, Gilbert R., ‘ The Evolution of the World Trading System – The Economic and Policy Context’, in Daniel Bethlehem, and others (eds), The Oxford Handbook of International Trade Law (2009; online edn, Oxford Academic, 18 Sept. 2012), https://doi.org/10.1093/oxfordhb/9780199231928.013.0002, accessed 2 Sept. 2024.
[1] Eiselen, S. GlobalTradeon and Harmonization of International Trade Law. In Globalization and Private Law, Cheltenham, UK: Edward Elgar Publishing. Available from: < https://doi.org/10.4337/9781849805216.00012> [Accesse Trade August 2024]
[2] Winham, Gilbert R., ‘ The Evolution of the World Trading System – TheTradeomic and Policy Context,’ in Daniel Bethlehem, and others (edsTradee Oxford Handbook of International Trade Law (2009; online edn, Oxford Academic, 18 Sept. 2012), https://doi.org/10.1093/oxfordhb/9780199231928.013.0002, accessed 2 Sept. 2024.
[3] Nina, E2023a. The Evolution of International Trade: A Historical Overview [WWW Document]. International TradeTradecil. URL https://tradecouncil.org/the-evolution-of-international-trade-a-historical-overview/ (Accessed 1st Sep 2024)
[4] Nina, E., 2023a. The Evolution of International Trade: A Historical Overview [WWW Document]. International Trade Council. URL https://tradecouncil.org/the-evolution-of-international-trade-Tradetorical-overview/ (AcceTrade1st Sep 2024)
[5] Ortiz-Ospina, E., Beltekian, D., Roser, M., Trade and Globalization [WWW Document]. Our World in Data. URL https://ourworldindata.org/trade-and-globalization#trade-has-changed-the-world-economy (AccessedTradeug 2024)
[6]C., 2023. The Impact of Globalization on International Trade Law: Trends and Challenges [WWW Document]. Court Magazine. URL https://www.courtmagazine.org/post/the-impact-of-globalization-on-international-trade-law-trends-and-challenges (Accessed 30 Aug 2024)
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