What is International Trade Law?

C. Mitchell

International trade law is the body of laws and agreements that governs how countries do business with each other. The economic health of many countries depends, at least in part, or the ability to import and export goods. International trade laws set out the parameters for how these trades take place. Most of the time, the laws are designed to ensure fairness to all parties, as well as to create something of a globally uniform and predictable set of rules.

The United Nations, which is headquarted in New York City, is a major arbiter of international trade disputes.
The United Nations, which is headquarted in New York City, is a major arbiter of international trade disputes.

There are three primary types of international trade law. The first is national: any country that makes its own internal rules about how trade will be conducted with other countries, or regulates how much of a certain resource can be exported, has created an international trade law. Second is bilateral. When two countries together agree to conduct their trade in a certain way, or to open trade freely between their borders, they create a bilateral trade agreement or trade law. Finally, countries often engage in multilateral agreement-making, which sets common rules and policies to be followed by a number of different global players.

International trade law regulates imports and exports.
International trade law regulates imports and exports.

Multilateral trade agreements are what most people think of when they think of trade law. The World Trade Organization (WTO) and the United Nations (UN) are the two foremost organizations involved in the creation of multilateral agreements. Each group is made up of representatives from around the world who attend meetings, brainstorm ideas, and come up with proposed laws and regulations that can shape the international trade landscape. It is through these meetings that the groundwork for most international trade law is set.

A majority of the world’s most prominent traders are members of both the World Trade Organization and the UN’s Commission on International Trade Law (UNCITRAL). The United States, Canada, most of the European Union, China, and Japan are among the most active participants. Both the WTO and the UNCITRAL make it their mission to facilitate broad discussion between countries. Not all discussions end in agreement, but many do.

When national representatives agree to certain standards or conditions of international trade, they are usually promising that their own national law aligns with the terms of the agreement. Sometimes, these agreements are relatively simple to implement. A promise to open trade with neighboring countries is an example. Agreements to restrict trade with countries known to deal in nuclear weapons, for instance, or promises to set trade rules against the export of certain goods to certain places, can take more time and legal weight to put in motion.

Before an international trade agreement can become trade law, it must be ratified at the national level. This means that each country must make sure that its own national laws reflect the terms and conditions of the agreement. Ratification often requires a lot of legal drafting and amendments, and can take years to finalize.

The process of international trade law can accordingly be quite slow, but it is continuous. There is no certain end point to when trade laws will be completed, in large part because trade customs have a tendency to shift with time. Much of trade law involves international economic law, which requires careful attention to fluctuations in currency and power dynamics between world leaders. As international markets change, new leaders come into power, and the global trade dynamics change, necessitating that international trade law evolve to stay relevant.

International trade law is the set of laws and agreements that governs how countries do business with each other.
International trade law is the set of laws and agreements that governs how countries do business with each other.

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Discussion Comments


@candyquilt-- I agree that countries don't really have a choice when it comes to following international trade laws. If they don't, no one will want to trade with them. Countries who don't trade a lot have poor economies and they can't develop.


@fBoyle-- If two countries are members of an international trade organization like the WTO, they can keep negotiating until they come to an agreement. For the most part, when countries sign up to the WTO, they already accept international trade laws. As for the new laws that are made, those are decided with the participation of all members.

If there is a dispute, the WTO has a mechanism to resolve disputes. So they play the middle man to help countries work out their differences.

Of course it's not easy to have a global trade system where everyone needs to play by the same rules. But countries try to be a part of this system because if they break the rules, they won't be able to trade which will damage their economy. Trade is something that every country needs. This is what encourages countries to trade according to international trade laws.


What happens when countries do not agree on an international trade law? And what happens when a country breaks a trade law?

Implementing a law nationally is easy. But how are these international laws implemented? Do the governments of countries listen? It must be difficult.

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