Fair trade is an institutional arrangement designed to help producers in developing countries achieve better trading conditions. Members of the fair trade movement advocate the payment of higher prices to exporters, as well as improved social and environmental standards; the movement focuses in particular on commodities, or products which are exported from developing countries to developed countries, but consumed in domestic markets most notably handicrafts, cocoa, sugar, fresh fruit, chocolate and gold. The movement seeks to promote greater equity in international trading partnerships through dialogue and respect, it promotes sustainable development by offering better trading conditions to, securing the rights of, marginalized producers and workers in developing countries. Fair trade is grounded in three core beliefs. Secondly, the world trade practices that exist promote the unequal distribution of wealth between nations. Lastly, buying products from producers in developing countries at a fair price is a more efficient way of promoting sustainable development than traditional charity and aid.
Fair trade labelling organizations use a definition of fair trade developed by FINE, an informal association of four international fair trade networks: Fairtrade Labelling Organizations International, World Fair Trade Organization, Network of European Worldshops and European Fair Trade Association. Fair trade is a trading partnership, based on dialogue and respect, that seeks greater equity in international trade. Fair trade organizations, backed by consumers, are engaged in supporting producers, awareness raising, in campaigning for changes in the rules and practice of conventional international trade. There are several recognized fair trade certifiers, including Fairtrade International, IMO, Make Trade Fair and Eco-Social. Additionally, Fair Trade USA a licensing agency for the Fairtrade International label, broke from the system and implemented its own fair trade labelling scheme, which expanded the scope of fair trade to include independent smallholders and estates for all crops. In 2008, Fairtrade International certified of products.
The World Trade Organization publishes annual figures on the world trade of services. The fair trade movement is popular in the UK, where there are 500 Fairtrade towns, 118 universities, over 6,000 churches, over 4,000 UK schools registered in the Fairtrade Schools Scheme. In 2011, over 1.2 million farmers and workers in more than 60 countries participated in Fairtrade International's fair trade system, which included €65 million in fairtrade premium paid to producers for use developing their communities. According to Fairtrade International, nearly six out of ten consumers have seen the Fairtrade mark and nine in ten of them trust it; some criticisms have been raised about fair trade systems. One 2015 study in a journal published by the MIT Press concluded that producer benefits were close to zero because there was an oversupply of certification, only a fraction of produce classified as fair trade was sold on fair trade markets, just enough to recoup the costs of certification; some research indicates that the implementation of certain fair trade standards can cause greater inequalities in some markets where these rigid rules are inappropriate for the specific market.
In the fair trade debate there are complaints of failure to enforce the fair trade standards, with producers, cooperatives and packers profiting by evading them. One proposed alternative to fair trade is direct trade, which eliminates the overhead of the fair trade certification, allows suppliers to receive higher prices much closer to the retail value of the end product; some suppliers use relationships started in a fair trade system to autonomously springboard into direct sales relationships they negotiate themselves, whereas other direct trade systems are supplier-initiated for social responsibility reasons similar to a fair trade system. There are a large number of fair trade and ethical marketing organizations employing different marketing strategies. Most fair trade marketers believe it is necessary to sell the products through supermarkets to get a sufficient volume of trade to affect the developing world; the Fairtrade brand is by far the biggest of the fair trade coffee brands. Packers in developed countries pay a fee to The Fairtrade Foundation for the right to use the brand and logo.
Packers and retailers can charge as much. The coffee has to come from a certified fair trade cooperative, there is a minimum price when the world market is oversupplied. Additionally, the cooperatives are paid an additional 10c per lb premium by buyers for community development projects; the cooperatives can, on average, sell only a third of their output as fair trade, because of lack of demand, sell the rest at world prices. The exporting cooperative can spend the money in several ways; some go to meeting the costs of conformity and certification: as they have to meet fair trade standards on all their produce, they have to recover the costs from a small part of their turnover, sometimes as little as 8%, may not make any profit. Some meet other costs; some is spent on social projects such as health clinics and baseball pitches. Sometimes there is money left over for the farmers; the cooperatives sometimes pay farmers a higher price than farmers do, sometimes less, but there is no evidence on, more common.
The marketing system for fair trade and non-fair trade coffee is
International trade is the exchange of capital and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product. While international trade has existed throughout history, its economic and political importance has been on the rise in recent centuries. Carrying out trade at an international level is a complex process when compared to domestic trade; when trade takes place between two or more nations factors like currency, government policies, judicial system and markets influence the trade. International economic and trade organizations address the process of trade as the political relations between two countries influences the trade between them and the obstacles of trading affect the mutual relationship adversely. To smoothen and justify the process of trade between countries of different economic standing, some international economic organisations were formed; these organisations work towards the growth of international trade.
A product, transferred or sold from a party in one country to a party in another country is an export from the originating country, an import to the country receiving that product. Imports and exports are accounted for in a country's current account in the balance of payments. Trading globally gives consumers and countries the opportunity to be exposed to new markets and products; every kind of product can be found in the international market: food, spare parts, jewellery, stocks and water. Services are traded: tourism, banking and transportation Advanced technology, industrialisation and multinational corporations have major impact on the international trade system. Increasing international trade is crucial to the continuance of globalisation. Nations would be limited to the goods and services produced within their own borders without international trade. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.
Carrying out trade at an international level is a more complex process than domestic trade. The main difference is that international trade is more costly than domestic trade; this is due to the fact that a border imposes additional costs such as tariffs, time costs due to border delays, costs associated with country differences such as language, the legal system, or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are more mobile within a country than across countries. Thus, international trade is restricted to trade in goods and services, only to a lesser extent to trade in capital, labour, or other factors of production. Trade in goods and services can serve as a substitute for trade in factors of production. Instead of importing a factor of production, a country can import goods that make intensive use of that factor of production and thus embody it. An example of this is the import of labor-intensive goods by the United States from China.
Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was increased when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country; the history of international trade chronicles notable events that have affected trading among various economies. There are several models which seek to explain the factors behind international trade, the welfare consequences of trade and the pattern of trade; the following table is a list of the 21 largest trading nations according to the World Trade Organization. Source: International Trade Centre President George W. Bush observed World Trade Week on May 18, 2001, May 17, 2002. On May 13, 2016, President Barack Obama proclaimed May 15 through May 21, 2016, World Trade Week, 2016. On May 19, 2017, President Donald Trump proclaimed May 21 through May 27, 2017, World Trade Week, 2017.
World Trade Week is the third week of May. Every year the President declares that week to be World Trade Week. Lists List of countries by current account balance List of countries by imports List of countries by exports List of international trade topics Jones, Ronald W.. "Comparative Advantage and the Theory of Tariffs". The Review of Economic Studies. 28: 161–175. Doi:10.2307/2295945. McKenzie, Lionel W.. "Specialization and Efficiency in World Production". The Review of Economic Studies. 21: 165–180. Doi:10.2307/2295770. Samuelson, Paul. "A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods". Journal of Economic Literature. 39: 1204–1214. Doi:10.1257/jel.39.4.1204. Data on the value of exports and imports and their quantities broken down by detailed lists of products are available in statistical collections on international trade published by the statistical services of intergovernmental and supranational organisations and national statistical institutes; the definitions and methodological concepts applied for the various statistical collections on international trade differ in terms of definition and coverage.
Metadata providing information on definitions and methods are published along with the data. United Nations Commodi
Emissions trading is a market-based approach to controlling pollution by providing economic incentives for achieving reductions in the emissions of pollutants. A central authority allocates or sells a limited number of permits to discharge specific quantities of a specific pollutant per time period. Polluters are required to hold permits in amount equal to their emissions. Polluters that want to increase their emissions must buy permits from others willing to sell them. Financial derivatives of permits can be traded on secondary markets. Various countries and groups of companies have adopted such trading systems, notably for mitigating climate change. In contrast to command-and-control environmental regulations such as best available technology standards and government subsidies and trade programs are a type of flexible environmental regulation that allows organizations to decide how best to meet policy targets. There are active trading programs in several air pollutants. For greenhouse gases, which cause climate change, permit units are called carbon credits.
The largest greenhouse gases trading program is the European Union Emission Trading Scheme, which trades in European Union Allowances. The United States has a national market to reduce acid rain and several regional markets in nitrogen oxides. Recent reduction in California's GHG emissions are not attributed to carbon trading but to other factors such as renewable portfolio standards and energy efficiency policies. GHG emissions increased at more than half of industrial point sources regulated by California's cap and trade program from 2013 to 2015. In theory, polluters who can reduce emissions most cheaply will do so, achieving the emission reduction at the lowest cost to society. Cap and trade is meant to provide the private sector with the flexibility required to reduce emissions while stimulating technological innovation and economic growth. In practice the theory can fall short. Environmental hotspots arise and impact areas nearest pollution sources when credits are purchased in lieu of emission reductions.
In addition to environmental justice issues cap and trade policy is not as effective as performance standards for reducing air pollutant emissions. For example, sulfur dioxide emissions and acidic sulfate deposition decreased to a larger extent more in Europe than in the United States over similar time periods with Europe employing traditional control approaches compared to the U. S.' Subsidized market approach. Pollution is a prime example of a market externality. An externality is an effect of some activity on an entity, not party to a market transaction related to that activity. Emissions trading is a market-based approach to address pollution; the overall goal of an emissions trading plan is to minimize the cost of meeting a set emissions target. In an emissions trading system, the government sets an overall limit on emissions, defines permits, or limited authorizations to emit, up to the level of the overall limit; the government may sell the permits, but in many existing schemes, it gives permits to participants equal to each participant's baseline emissions.
The baseline is determined by reference to the participant's historical emissions. To demonstrate compliance, a participant must hold permits at least equal to the quantity of pollution it emitted during the time period. If every participant complies, the total pollution emitted will be at most equal to the sum of individual limits; because permits can be bought and sold, a participant can choose either to use its permits exactly. In effect, the buyer pays a charge for polluting, while the seller gains a reward for having reduced emissions. In many schemes, organizations which do not pollute may trade permits and financial derivatives of permits. In some schemes, participants can bank allowances to use in future periods. In some schemes, a proportion of all traded permits must be retired periodically, causing a net reduction in emissions over time. Thus, environmental groups may buy and retire permits, driving up the price of the remaining permits according to the law of demand. In most schemes, permit owners can receive a tax deduction.
The government lowers the overall limit over time, with an aim towards a national emissions reduction target. According to the Environmental Defense Fund, cap-and-trade is the most environmentally and economically sensible approach to controlling greenhouse gas emissions, the primary cause of global warming, because it sets a limit on emissions, the trading encourages companies to innovate in order to emit less."International trade can offer a range of positive and negative incentives to promote international cooperation on climate change. Three issues are key to developing constructive relationships between international trade and climate agreements: how existing trade policies and rules can be modified to be more climate friendly.
A tax is a mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures. A failure to pay, along with resistance to taxation, is punishable by law. Taxes may be paid in money or as its labour equivalent. Most countries have a tax system in place to pay for public, common or agreed national needs and government functions; some levy a flat percentage rate of taxation on personal annual income, but most scale taxes based on annual income amounts. Most countries charge a tax both on corporate income and dividends. Countries or subunits also impose wealth taxes, property taxes, sales taxes, value-added taxes, payroll taxes or tarrifs; the legal definition, the economic definition of taxes differ in some ways such as economists do not regard many transfers to governments as taxes. For example, some transfers to the public sector are comparable to prices. Examples include, tuition at public universities, fees for utilities provided by local governments.
Governments obtain resources by "creating" money and coins, through voluntary gifts, by imposing penalties, by borrowing, by confiscating wealth. From the view of economists, a tax is a non-penal, yet compulsory transfer of resources from the private to the public sector, levied on a basis of predetermined criteria and without reference to specific benefit received. In modern taxation systems, governments levy taxes in money; the method of taxation and the government expenditure of taxes raised is highly debated in politics and economics. Tax collection is performed by a government agency such as the Ghana Revenue Authority, Canada Revenue Agency, the Internal Revenue Service in the United States, Her Majesty's Revenue and Customs in the United Kingdom or Federal Tax Service in Russia; when taxes are not paid, the state may impose civil penalties or criminal penalties on the non-paying entity or individual. The levying of taxes aims to raise revenue to fund governing or to alter prices in order to affect demand.
States and their functional equivalents throughout history have used money provided by taxation to carry out many functions. Some of these include expenditures on economic infrastructure, scientific research and the arts, public works, data collection and dissemination, public insurance, the operation of government itself. A government's ability to raise taxes is called its fiscal capacity; when expenditures exceed tax revenue, a government accumulates debt. A portion of taxes may be used to service past debts. Governments use taxes to fund welfare and public services; these services can include education systems, pensions for the elderly, unemployment benefits, public transportation. Energy and waste management systems are common public utilities. According to the proponents of the chartalist theory of money creation, taxes are not needed for government revenue, as long as the government in question is able to issue fiat money. According to this view, the purpose of taxation is to maintain the stability of the currency, express public policy regarding the distribution of wealth, subsidizing certain industries or population groups or isolating the costs of certain benefits, such as highways or social security.
Effects can be divided in two fundamental categories: Taxes cause an income effect because they reduce purchasing power to taxpayers. Taxes cause a substitution effect when taxation causes a substitution between taxed goods and untaxed goods. If we consider, for instance, two normal goods, x and y, whose prices are px and py and an individual budget constraint given by the equation xpx + ypy = Y, where Y is the income, the slope of the budget constraint, in a graph where is represented good x on the vertical axis and good y on the horizontal axes, is equal to -py/px; the initial equilibrium is in the point, in which budget constraint and indifference curve are tangent, introducing an ad valorem tax on the y good, the budget constraint's slope becomes equal to -py/px. The new equilibrium is now in the tangent point with a lower indifferent curve; as can be noticed the tax's introduction causes two consequences: It changes the consumers' real income It raises the relative price of y good. The income effect shows the variation of y good quantity given by the change of real income.
The substitution effect shows the variation of y good determined by relative prices' variation. This kind of taxation can be considered distortionary. Another example can be the Introduction of an income lump-sum tax, with a parallel shift downward of the budget constraint, can be produced a higher revenue with the same loss of consumers' utility compared with the property tax case, from another point of view, the same revenue can be produced with a lower utility sacrifice; the lower utility or the lower revenue given by a distortionary tax are called excess pressure. The same result, reached with an income lump-sum tax, can be obtained with these following types of taxes (all of them cause only a budget constraint's shift without causi
Currency war known as competitive devaluations, is a condition in international affairs where countries seek to gain a trade advantage over other countries by causing the exchange rate of their currency to fall in relation to other currencies. As the exchange rate of a country's currency falls, exports become more competitive in other countries, imports into the country become more and more expensive. Both effects benefit the domestic industry, thus employment, which receives a boost in demand from both domestic and foreign markets. However, the price increases for import goods are unpopular. Competitive devaluations have been rare as countries have preferred to maintain a high value for their currency. Countries have allowed market forces to work, or have participated in systems of managed exchanges rates. An exception occurred when a currency war broke out in the 1930s when countries abandoned the gold standard during the Great Depression and used currency devaluations in an attempt to stimulate their economies.
Since this pushes unemployment overseas, trading partners retaliated with their own devaluations. The period is considered to have been an adverse situation for all concerned, as unpredictable changes in exchange rates reduced overall international trade. According to Guido Mantega, former Brazilian Minister for Finance, a global currency war broke out in 2010; this view was echoed by numerous other government officials and financial journalists from around the world. Other senior policy makers and journalists suggested the phrase "currency war" overstated the extent of hostility. With a few exceptions, such as Mantega commentators who agreed there had been a currency war in 2010 concluded that it had fizzled out by mid-2011. States engaging in possible competitive devaluation since 2010 have used a mix of policy tools, including direct government intervention, the imposition of capital controls, indirectly, quantitative easing. While many countries experienced undesirable upward pressure on their exchange rates and took part in the ongoing arguments, the most notable dimension of the 2010–11 episode was the rhetorical conflict between the United States and China over the valuation of the yuan.
In January 2013, measures announced by Japan which were expected to devalue its currency sparked concern of a possible second 21st century currency war breaking out, this time with the principal source of tension being not China versus the US, but Japan versus the Eurozone. By late February, concerns of a new outbreak of currency war had been allayed, after the G7 and G20 issued statements committing to avoid competitive devaluation. After the European Central Bank launched a fresh programme of quantitative easing in January 2015, there was once again an intensification of discussion about currency war. In the absence of intervention in the foreign exchange market by national government authorities, the exchange rate of a country's currency is determined, in general, by market forces of supply and demand at a point in time. Government authorities may intervene in the market from time to time to achieve specific policy objectives, such as maintaining its balance of trade or to give its exporters a competitive advantage in international trade.
Devaluation, with its adverse consequences, has rarely been a preferred strategy. According to economist Richard N. Cooper, writing in 1971, a substantial devaluation is one of the most "traumatic" policies a government can adopt – it always resulted in cries of outrage and calls for the government to be replaced. Devaluation can lead to a reduction in citizens' standard of living as their purchasing power is reduced both when they buy imports and when they travel abroad, it can add to inflationary pressure. Devaluation can make interest payments on international debt more expensive if those debts are denominated in a foreign currency, it can discourage foreign investors. At least until the 21st century, a strong currency was seen as a mark of prestige, while devaluation was associated with weak governments. However, when a country is suffering from high unemployment or wishes to pursue a policy of export-led growth, a lower exchange rate can be seen as advantageous. From the early 1980s the International Monetary Fund has proposed devaluation as a potential solution for developing nations that are spending more on imports than they earn on exports.
A lower value for the home currency will raise the price for imports while making exports cheaper. This tends to encourage more domestic production, which raises employment and gross domestic product; such a positive impact is not guaranteed however, due for example to effects from the Marshall–Lerner condition. Devaluation can be seen as an attractive solution to unemployment when other options, like increased public spending, are ruled out due to high public debt, or when a country has a balance of payments deficit which a devaluation would help correct. A reason for preferring devaluation common among emerging economies is that maintaining a low exchange rate helps them build up foreign exchange reserves, which can protect against future financial crises. A state wishing to devalue, or at least check the appreciation of its currency, must work within the constraints of the prevailing International monetary system. During the 1930s, countries had more direct control over their exchange rates through the actions of their central banks.
Following the collapse of the Bretton Woods system in the early 1970s, markets subst
Import substitution industrialization
Import substitution industrialization is a trade and economic policy which advocates replacing foreign imports with domestic production. ISI is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products; the term refers to 20th-century development economics policies, although it has been advocated since the 18th century by economists such as Friedrich List and Alexander Hamilton. ISI policies were enacted by countries in the Global South with the intention of producing development and self-sufficiency through the creation of an internal market. ISI works by having the state lead economic development through nationalization, subsidization of vital industries, increased taxation, protectionist trade policies. Import substitution industrialization was abandoned by developing countries in the 1980s and 1990s due to the insistence of the IMF and World Bank on their structural adjustment programs of global market-driven liberalization aimed at the Global South.
In the context of Latin American development, the term "Latin American structuralism" refers to the era of import substitution industrialization in many Latin American countries from the 1950s until the 1980s. The theories behind Latin American structuralism and ISI were organized in the works of Raúl Prebisch, Hans Singer, Celso Furtado, other structural economic thinkers, gained prominence with the creation of the United Nations Economic Commission for Latin America and the Caribbean. While the theorists behind ISI or Latin American structuralism were not homogeneous and did not belong to one particular school of economic thought, ISI and Latin American structuralism and the theorists who developed its economic framework shared a basic common belief in a state-directed, centrally planned form of economic development. In promoting state-induced industrialization through governmental spending through the infant industry argument, ISI and Latin American structuralist approaches to development are influenced by a wide range of Keynesian and socialist economic thought.
ISI is associated and linked with dependency theory, although the latter has traditionally adopted a much broader Marxist sociological framework in addressing what are perceived to be the origins of underdevelopment through the historical effects of colonialism and neoliberalism. Though ISI is a development theory, its political implementation and theoretical rationale are rooted in trade theory: it has been argued that all or all nations that have industrialized have followed ISI. Import substitution was practiced during the mid-20th century as a form of developmental theory that advocated increased productivity and economic gains within a country; this was an inward-looking economic theory practiced by developing nations after WW2. Many economists at the time considered the ISI approach as a remedy to mass poverty: bringing a third-world country to first-world status through national industrialization. Mass poverty is defined thusly: "the dominance of agricultural and mineral activities – in the low-income countries, in their inability, because of their structure, to profit from international trade,".
Mercantilist economic theory and practices of the 16th, 17th, 18th centuries advocated building up domestic manufacturing and import substitution. In the early United States, the Hamiltonian economic program the third report and the magnum opus of Alexander Hamilton, the Report on Manufactures, advocated for the U. S. to become self-sufficient in manufactured goods. This formed the basis of the American School in economics, an influential force in the United States during its 19th-century industrialization. Werner Baer contends that all countries that have industrialized after the United Kingdom went through a stage of ISI, in which the large part of investment in industry was directed to replace imports. Going farther, in his book Kicking Away the Ladder, Korean economist Ha-Joon Chang argues, based on economic history, that all major developed countries, including the United Kingdom, used interventionist economic policies to promote industrialization and protected national companies until they had reached a level of development in which they were able to compete in the global market, after which those countries adopted free market discourses directed at other countries to obtain two objectives: open their markets to local products and prevent them from adopting the same development strategies that led to the developed nations' industrialization.
As a set of development policies, ISI policies are theoretically grounded on the Prebisch–Singer thesis, on the infant industry argument, on Keynesian economics. From these postulates, it derives a body of practices, which are commonly: an active industrial policy to subsidize and orchestrate production of strategic substitutes, protective barriers to trade, an overvalued currency to help manufacturers import capital goods, discouragement of foreign direct investment. By placing high tariffs on imports and other protectionist, inward-looking trade policies, the citizens of any given country, using a simple supply-and-demand rationale, will substitute the less-expensive good for the more expensive; the primary industry of importance would gather its resources, such as labor from other industries in this situation. In time, a third-world country would look and behave similar to a first-world country, with a new accumulation of capital and an increase of TFP (total factor prod
Timeline of international trade
The history of international trade chronicles notable events that have affected the trade between various countries. In the era before the rise of the nation state, the term'international' trade cannot be applied, but means trade over long distances. In the 21st century, the European Union and the United States are the three largest trading markets in the world. Records from the 19th century BE attest to the existence of an Assyrian merchant colony at Kane sh in Cappuccino; the domestication of camel allows Arabian nomads to control long distance trade in spices and silk from the Far East. The Egyptians trade in the Red Sea, importing spice from Arabia. Indian goods are brought in Arabian vessels to Aden; the "ships of Tarnish", a Syrian fleet equipped at Zion Gerber, make several trading voyages to the East bringing back gold, silver and precious stones. Goliath-Piles er III attacks Gaza; the Greek Ptolemaic dynasty exploits trading opportunities with India prior to the Roman involvement. The cargo from the India and Egypt trade is shipped to Aden.
The Silk Road is established after the diplomatic travels of the Han Dynasty Chinese envoy Zhang Ian to Central Asia, with Chinese goods making their way to India and the Roman Empire, vice versa. With the establishment of Roman Egypt, the Romans initiate trade with India; the goods from the East African trade are landed at one of the three main Roman ports, Berenice or Moos Hormones. Moos Hormones and Berenice appear to have been important ancient trading ports. Hanger controls the Incense trade routes across Arabia to the Mediterranean and exercises control over the trading of aromatics to Babylon in the 1st century BC. Additionally, it served as a port of entry for goods shipped from India to the East. Due to its prominent position in the incense trade, Yemen attracts settlers from the fertile crescent. Pres-Islamic Mecca's use the old Incense Route to benefit from the heavy Roman demand for luxury goods. In Java and Borneo, the introduction of Indian culture creates a demand for aromatics.
These trading outposts serve the Chinese and Arab markets. Following the demise of the incense trade Yemen takes to the export of coffee via the Red Sea port of la-Mocha; the Abbas ids use Alexandria, Tammie and Sirrah as entry ports to India and China. At the eastern terminus of the Silk Road, the Tang Dynasty Chinese capital at Chang'an becomes a major metropolitan center for foreign trade and residence; this role would be assumed by Hangzhou during the Song Dynasty. Guangzhou was China's greatest international seaport during the Tang Dynasty, but its importance was eclipsed by the international seaport of Lanzhou during the Song Dynasty. Merchants arriving from India in the port city of Aden pay tribute in form of musk, camphor and sandalwood to Ibn Riyadh, the sultan of Yemen. Indian exports of spices find mention in the works of Ibo Khurdadhbeh, AL-Afghani, Lakisha bin Trimaran and Al Kalashnikov; the Hanseatic League secures trading privileges and market rights in England for goods from the League's trading cities in 1157.
Due to the Turkish hold on the Levant during the second half of the 15th century the traditional Spice Route shifts from the Persian Gulf to the Red Sea. In 1492 a Spanish expedition commanded by Christopher Columbus arrive in America. Portuguese diplomat Peron ad Convivial undertakes a mission to explore the trade routes of the Near East and the adjoining regions of Asia and Africa; the exploration commenced from Santana to Barcelona, Alexandria, Cairo and to India. Portuguese explorer and adventurer Ascot DA Gama is credited with establishing another sea route from Europe to India. In the 1530s, the Portuguese ship spices to Hormuz. Japan introduced a system of foreign trade licenses to prevent smuggling and piracy in 1592; the first Dutch expedition left from Amsterdam for South East Asia. A Dutch convoy sailed in 1598 and returned one year with 600,000 pounds of spices and other East Indian products; the Dutch East India Company is formed in 1602. The first English outpost in the East Indies is established in Sumatra in 1685.
Japan introduces the closed door policy regarding trade in 1639. The 17th century saw military disturbances around the Ottawa river trade route. During the late 18th century, the French built military forts at strategic locations along the main trade routes of Canada; these forts checked the British advances, served as trading posts which included the Native Americans in fur trade and acted as communications posts. In 1799, The Dutch East India company the world's largest company goes bankrupt due to the rise of competitive free trade. Japan is served by the Portuguese from Macao and by the Dutch. Despite the late entry of the United States into the spice trade, merchants from Salem, Massachusetts trade profitably with Sumatra during the early years of the 19th century. In 1815, the first commercial shipment of nutmegs from Sumatra arrived in Europe. Grenada becomes involved in the spice trade; the Siamese-American Treaty of 1833 calls for free trade, except for export of rice and import of munitions of war.
Opium War – Britain invades China to overturn the Chinese ban on opium imports. Britain unilaterally adopts a policy of free trade and abolishes the Corn Laws in 1846; the first international free trade agreement, the Cob den-Chevalier