Trade

Trade refers to a global pattern of exchange in which goods and services produced in one political jurisdiction are consumed in another. The long history of trade is one of intercultural contact, competing theoretical paradigms, and controversy over the place of trade in national economic development strategies. Archaeological evidence suggests that humans have engaged in formal patterns of exchange for longer than 5,000 years. Informal patterns of exchange based on infrequent contact (either violent or peaceful) have linked small human groups since the Paleolithic period. Any theory of trade is necessarily a narrative about competition and the ways that humans have sought to exploit weaknesses in rivals, ameliorate the advantages of competitors, and use the rewards gained by trade to realize the ambitions of elites. However, the dominant intellectual tradition, which goes back as far as Adam Smith and David Ricardo, holds that, at least in theory, trade can benefit all parties involved if it is organized on a transparent and equitable basis.

Controversies over what constitutes advantage and disadvantage in the governance of trade highlight the challenges that beset the global trading system today. The World Trade Organization (WTO) Agreement came into force on January 1, 1995, and was thought by many experts to be the beginning of a new era of multilateral cooperation and economic growth through the intensification of global trade flows. Since the agreement went into effect, global flows of trade have multiplied, as have the many imbalances the trading system seeks to check. The WTO remains mired in age-old problems that arise when the strong bargain with the weak and in new problems that beset a governance system operating within a complex and incomplete system of international law.