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5000 BCE
Origin of international trade
At the end of the Neolithic (9000 BC – 4000 BC), man discovers agriculture and begins to exchange surplus crops. -
4000 BCE
Barter system
The barter of goods was the way in which ancient civilizations began to trade. -
1271
The route of silk
Marco Polo was a pioneer in the development of European trade with the extreme east opening the silk route. -
1492
Discovery of America
Christopher Columbus discovered America. -
Mercantilism (16th to the 18th century)
Mercantilist analysis insisted that the acquisition of wealth, particularly wealth in the form of gold, was of paramount importance for national policy. Characteristics:
Control of prices and wages.
Foster national industries through the use of tariffs and quotas on imports.
Discourage trade agreements between nations.
Promote exports of finished goods and imports of raw materials.
Limit the exports of raw materials and the imports of finished goods. -
“Favorable” balance of trade
A “favorable” balance of trade is one in which the value of domestic goods exported exceeds the value of foreign goods imported. Mercantilists’ trade policy consisted in encourage exports, discourage imports, and take the proceeds of the resulting export surplus in gold. Suma-cero game. Only one nation can increase its trade at the expense of other nations. -
Japan´closed-door policy
Japan introduced the closed-door policy regarding trade (only very selective trading to the Dutch and Chinese was allowed). -
English Navigation Act
English Navigation Act of 1651, which reserved for the home country the right to trade with its colonies and prohibited the import of goods of non-European origin unless transported in ships flying the English flag. This law lingered until 1849. -
Liberalism (Middle of the 18th century)
In France, the economists known as Physiocrats demanded liberty of production and trade. Characteristics:
Opposition to excessively high customs duties.
Negotiation of trade agreements with foreign powers. -
The absolute advantage theory
In England, economist Adam Smith demonstrated in his book The Wealth of Nations the advantages of removing trade restrictions. -
The Anglo-French Treaty
The Anglo-French Treaty, which ended what had been an economic war between the two countries. -
The Reciprocity of Duties Act
The Reciprocity of Duties Act was passed, which greatly aided the British carry trade and made permissible the reciprocal removal of import duties under bilateral trade agreements with other nations. -
Repeal of the Corn Laws
Britain unilaterally adopts a policy of free trade and abolishes the Corn Laws. -
Protectionism
A protective customs policy effectively sheltered many national economies from outside competition. Restrictive economic policies were justified by the claim that, up to a certain point, the government should keep foreign merchandise off the domestic market in order to shelter national production from outside competition. To this end, customs levies were introduced in increasing number, replacing outright bans on imports, which became less and less frequent. -
British dropped its protectionist policy
Most protectionist policies on British imports had been dropped. -
The French tariff of 1860
The French tariff of 1860, charged extremely high rates on British products: 60 percent on pig iron; 40 to 50 percent on machinery; and 600 to 800 percent on woolen blankets. -
The Cobden-Chevalier Treaty
The first international free trade agreement was established, “the Cobden-Chevalier Treaty of 1860”, between the United Kingdom and France. The Anglo-French trade agreement of 1860 provided that French protective duties were to be reduced to a maximum of 25 percent within five years, with free entry of all French products except wines into Britain. The agreement also included a most favored nation clause (MFN). -
Italy increases its tariffs
Italy would institute a moderate set of tariffs in 1878 with more severe tariffs to follow in 1887 -
Resurgence of protectionism
A reaction in favour of protection spread throughout the Western world. Germany adopted a systematically protectionist policy and was soon followed by most other nations. Germany would revert to more protectionist policies with its "iron and rye" tariff -
The McKinley Tariff Act
With the McKinley Tariff Act of 1890, the United States raised its duties sharply. This Act was ultraprotectionist. -
The introduction of Méline tariff
France introduced its Méline tariff in order to protect the profit of the French cereal farmers. -
Economic liberty
Quantitative restrictions were unheard of.
Customs duties were low and stable.
People who wished to settle and work in a country could go where they wished with few restrictions; they could open businesses, enter trade, or export capital freely.
Equal opportunity to compete was the general rule, the sole exception being the existence of limited customs preferences between certain countries, most usually between a home country and its colonies. -
The economic recession
The economic downturn prompted many countries to impose new trade restrictions, like the increase of customs duties, because of the nationalist ideologies and the pressure of economic conditions (fluctuation of their currencies and depreciation). -
The first World Economic Conference
In an attempt to end the continual raising of customs barriers, the League of Nations organized the first World Economic Conference in May 1927. Twenty-nine states, including the main industrial countries, subscribed to an international convention that was the most minutely detailed and balanced multilateral trade agreement approved to date. -
The Great Depression
During the Great Depression of the 1930s, unemployment in major countries reached unprecedented levels and engendered an epidemic of protectionist measures. Countries attempted to shore up their balance of payments by raising their customs duties and introducing a range of import quotas or even import prohibitions, accompanied by exchange controls. The planning of foreign trade came to be considered a normal function of the state. -
The World War II
The economic insecurity and extreme nationalism of the period created the conditions for the outbreak of World War II. Mercantilist policies dominated the world scene until after World War II, when trade agreements and supranational organizations became the chief means of managing and promoting international trade. -
Multilateral Regionalism
The International Monetary Fund (IMF), World Bank, and International Trade Organization (ITO) arose out of the Bretton Woods Agreement. The ITO failed to materialize, and its plan to oversee the development of a non-preferential multilateral trading order would be taken up by the GATT -
The “new” mercantilism
World War I. By the end of the hostilities, world trade had been disrupted to a degree that made recovery very difficult. The first five years of the postwar period were marked by the dismantling of wartime controls. -
The General Agreement on Tariffs and Trade
The GATT was designed to encourage the reduction of tariffs among member nations (23), and thereby provide a foundation for the expansion of multilateral trade. -
The European Economic Community becomes the European Union
Founding treaties of the European Union:
1951. Treaty establishing the European Coal and Steel Community (six countries)
1957. Treaty establishing the European Atomic Energy Community
1957. Treaty establishing the European Economic Community -
The European Economic Area
The EEA is formed to provide for the free movement of persons, goods, services and capital within the internal market of the European Union and the European Free Trade Association. -
NAFTA
The North American Free Trade Agreement (NAFTA) takes effect. -
WTO
GATT was replaced by the World Trade Organization as the global supervisor of world trade liberalization. -
21st century
Countries have entered into several pacts to move towards free trade where the countries do not impose tariffs in terms of import duties and allow trading of goods and services to go on freely.
The Transatlantic Trade and Investment Partnership (TTIP)
The Transpacific Partnership (TPP)
The Regional Comprehensive Economic Partnership (RCEP)
