A Short History of International Trade

Trade is as old as history itself. In the beginning, people exchanged goods such as food and clothes. Later, they began to use money for buying and selling. But international trade only became important in the fourteenth and fifteenth centuries, when many modern countries were formed.

In the seventeenth century, most governments had a very simple idea of trade. They wanted to sell as much as possible to other countries; at the same time, they wanted to buy as little as possible from other countries. This was called mercantilism, and it helped successful countries to become rich. For example, in 1651, the government of England made a new law called the Navigation Act: this meant that English ships controlled all the trade with countries in the British Empire. The French made a similar law.

In the eighteenth century, economists began to see disadvantages of mercantilism. Because every country was trying to sell more than it bought, countries were not working together. French and English economists told their governments that a trade agreement would be bеtter for both countries. In 1786, France and England made an agreement. Other countries made similar agreements, and trade became easier and cheaper over the next hundred years or more.

The beginning of the twentieth century was a bad time for trade. Many countries in the world were at war between 1914 and 1918. Later, the Great Depression of the 1930s made trade difficult. Countries no longer wanted to work together – they were only interested in their own economies. This “new mercantilism” made the Depression last longer.

In the 1940s, many countries decided that they needed to make trade agreements to help the world economy. In 1947, twenty-three countries made an agreement called GATT (General Agreement on Tariffs and Trade). This made it easier and cheaper for countries to buy and sell goods.

Since 1947, the GATT countries have met every few years, often in Geneva in Switzerland, to talk about any problems they have with trade GATT played a very important part in the development of world trade for fifty years.

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Answer the questions:

1. Describe the first way of trading in early times.

2. When did international trade become important?

3. What is mercantilism? What laws did it help to make?

4. What were the disadvantages of mercantilism?

5. Speak about trade agreement between England and France in 1786.

6. Why was the beginning of the 20^th century a bad time for trade?

7. What did some countries decide to do to help world economy in 1940?

8. Speak about international trade events of the year 1947.

9. What role does GATT play in the development of world trade?