International trade law is a subset of public international law, and consists of the rules governing trade between nations. Historically this area of law was primarily concerned with trade in goods, but now includes trade in services (effectively the cross-border supply and consumption of services) and trade in intellectual property. International trade law has relevance to other fields of international economic law, including investment law. However, the focus of this chapter is on trade law as conducted under the auspices of the World Trade Organization (WTO), an organisation that commenced on 1 January 1995. The WTO administers many agreements, and not all are covered by this chapter. Of particular note, the Agreement on Agriculture and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are not covered: further reading on these Agreements is listed at the end of the chapter. To understand the laws that the WTO administers, it is necessary to understand both the economic theories of international trade, and the history of international trade law. This chapter introduces these concepts, and then explains the current structure of the WTO, including the dispute settlement processes. It then covers the core disciplines of the General Agreement on Tariffs and Trade 1994 (GATT) and the main exceptions to these disciplines, before turning to the safeguards, dumping and subsidies regimes. The chapter then introduces the two agreements that cover regulatory standards at the WTO, and finally provides an overview of the General Agreement on Trade in Services.
Economic theories of trade
For much of the 16th to 18th centuries, international trade operated in accordance with the theory of mercantilism – goods were exchanged for gold, and nations tried to amass as much gold for themselves as possible. Nations aimed to obtain raw goods (often from colonies), transform them and sell the final products to other nations for a profit. Thus the focus was primarily on exporting goods rather than importing goods. In the late 18th and early 19th centuries new theories of trade emerged – first with Adam Smith's theory of absolute advantage, followed by David Ricardo's theory of comparative advantage. Both theories rest on the idea of specialisation of production of goods, using labour as an input unit for production.