commerce, in economics: International Trade Today

International Trade Today

The theory of commerce as imposed by the national state has varied from the mercantilism of the 17th and 18th cent. and the protective tariff of the 19th and 20th cent. to the free trade that Britain long upheld. After World War II the cold war limited trade between Communist and capitalist countries until the late 1980s, but the need for commercial expansion led to the creation of a number of international and regional systems designed to remove trade barriers. The International Monetary Fund was established in 1944 to help nations finance temporary trade deficits. The General Agreement on Tariffs and Trade (GATT), signed in 1947 by 23 major industrial countries to reduce tariffs, evolved into an ongoing mechanism for reducing trade barriers, and after eight rounds of negotiations, the Uruguay Round (the last round, 1995) created the World Trade Organization.

In 1957 the European Economic Community was created, and in the 1980s and early 90s European leaders signed a series of agreements that created a unified West European economy in 1993 (see European Union). In 1992 leaders from the United States, Canada, and Mexico signed the North American Free Trade Agreement (NAFTA); Mercosur was established a year earlier in South America. Nonetheless, national economic interests have been difficult to overcome, and a number of countries, including the United States, passed protectionist legislation and enacted retaliatory tariffs in the 1980s and 90s.

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