With the 6th largest economy in the world the United Kingdom relies on international trade. In 2013 the UK was the 4th largest importer and exporter in the world – clearly demonstrating that we rely on international trade for our country to thrive. But, we weren’t the first to start trading, in fact international trade can be traced back to Ancient History, and the process started with luxury goods.
Although it may seem unlikely, the story of trading starts with a camel – when Arabic nomads figured out how to domesticate them, camels soon went from being merely a mode of transport, to a key component of international trade with the movement of spices and silk from the far east.
It didn’t take long to realise that camels just weren’t going to cut it, and trading with ships began in Ancient Egypt although the goods remained the same as spices were important from Arabia.
In 202 – 206BC – the Han Dynasty – the most famous Asian trade route came into being – the Silk Road. So named for the luxury silk goods that were exported from China to India, Persia and the Roman Empire. The development of this major trade route is cited to have been a major factor in the development of China and it’s economy, a story which is shared with many international exporters throughout history.
Throughout Ancient History trade in luxuries blossomed- items such as spices and silks were the main imports and exports as they were able to last across the long and dangerous voyages. Soon incense was one of the most significant cargos being traded, and this is where we can see the first significant controls over trading – and also an early example of conflict in trade. Prominent king of Assyria, Tiglath-Pileser III reigned in the eigth century BC and it was thought in this time that Tiglath-Pileser III attacked Gaza in order to control trade along the Incense Route. This route was a network of major ancient land and sea trading routes linking the Mediterranean world and Egypt to Northeastern Africa and Arabia to India and beyond.
If we fast forward a few hundred years we really see a development of trade routes across the Western world. Portugal was a leader in the discovery of trade and the East. From 1460 – 1526 (approx) a diplomat, Pero da Covilha, explored trade routes from Portugal to Barcelona, Naples, Alexandria, and ultimately to India.
Later in the century, 1595, the first Dutch expedition left from Amsterdam for Sout East Asia, which began the process of establishing this trade route. By 1598 the Dutch sent a convoy along this pre-established route, and returned a year later with 600,000 pounds of Spices and other East Indian Products. This was the beginning of the Dutch East India company, and although it was not the first, with the Austrian East India Company being formed in 1776, and the English East India Company being formed in 1700, the Dutch East India statistically eclipsed it’s rivals, and within the states of the Netherlands it possessed almost governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, coin money, and establish colonies. But by 1799 the Dutch East India company had gone bankrupt, due in part to the rise of free trade and therefore, competition.
In 1639 Japan introduced it’s closed door policy to trade, shutting itself off to foreigners and only allowing very selective trading to the Dutch and Chinese, cutting it from the international trade route map. This move was made relatively shortly after Japan introduced a system of foreign trade licenses to prevent smuggling and piracy in 1592. However, by 1868 Japan began to open it’s borders and quickly industrialised due to the introduction of international trade.
Moving from the early modern, to the modern era, sees international trade history go from a period of discovery and relative success, to a period in which one of the most significant wars of trade began – The Opium War of 1839–42, between Britain and China. The war was so named as this period saw Chinese officials attempting to end the spread of opium, and confiscated around 20,000 chests of opium from British traders. The British government, although not officially denying China’s right to control imports of the drug, objected to this seizure, and China had strict laws of import and export, which was denying Britain a significant trade opportunity, as well as creating a silver shortage in Britain.
In 1860 a free trade agreement was agreed with Britain and France – sparking agreements with other countries in Europe, although this was not the first, as the Siamese-American Treaty of 1833 called for free trade, between Salem, Massachusetts and Sumatra.
The First and Second World Wars Understandably had a significant impact of international trade. Not only did the map of trade change significantly during the wars, Post-War trade looked different too. In 1946 a set of rules and institutions intended to prevent national trade barriers being erected – the Bretton Woods system – was put into effect. A year later, 1947, 23 countries agree to General Agreement on Tariffs and Trade to rationalise trade among nations.
Within Europe two major changes occurred, with the establishing of the European Economic Community in 1958 which was designed to bring a common market, among its six founding members: Belgium, France, Italy,Luxembourg, the Netherlands and West Germany. In 1960, the European Free Trade Association was established, itself a trade agreement between seven countries in Europe: Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom, which allowed lower tariffs and easier trading between these countries.
By 1995 the World Trade Organisation was created. Still in operation today the World Trade Organisation aims to facilitate and liberalise international trade. It has has 160 members and 24 observer governments – membership includes the European Union, and since 2007 WTO member states represented 96.4% of global trade and 96.7% of global GDP.