International Trade Law: Meaning and Principles

The legislation governing global trade is known as "international trade law". It has both public and private components. The public component of ITL, which is a subset of public international law, aims to coordinate state governments' business policies. personal international trade law’s an element that regulates cross-border business dealings between individuals originating from various states. In large part, this is covered by private international Law.

Moreover, organisations like the WTO and United Nations Commission on Trade Law has been working to provide standardized laws in a variety of States and are expected to include multinational transactions in their different legal system. This procedure is referred to as "legal unification." This module contains ITL and is solely covered in its public aspects.

What does Exactly the International Trade Law Define?

The set of laws and agreements that control trade between nations is known as international trade law. International trade laws define the norms that governments and corporations must follow in order to do business across borders. International agreements are created with the aid of practicing lawyers. They inform companies about the steps they must take to comply with the laws and regulations governing international trade.

History of International Law

To provide an institutional framework for post-World War II international trade, the General Agreement on Tariffs and Trade (GATT), the International Monetary Fund (IMF), and the International Bank for Reconstruction and Development (IBAD) were founded on economic harmony. They were created as a solution to the nation's economic issues. foreign trade during the interwar years. The First World War ended quickly, and The League of Nations was founded to encourage a multilateral approach to issues on a global scale.

Although the League lacked a specific structure to address global economic issues, its secretariat made a substantial intellectual contribution to the study of economic issues. Initially, the Global Economic In 1927, a conference was conducted under the League's auspices, and it resulted in The Geneva Agreement on the Restriction of Export and Import It was the first multilateral agreement. endeavor to create a legal framework for global trade. As per the Convention, constraints on the volume of foreign trade, with the exception of the balance of payments purposes.

The Great Depression struck the world economy in the early 1930s. Governments responded by placing limits on imported goods in an effort to save domestic jobs. The U.S. Congress passed the Smoot-Hawley Act in 1930. whereby import taxes were significantly increased. similar responses from other states manner, and the "beggar-my-neighbor" policy started to take hold.

Is International Trade Law a Federal Law?

The only government with the power to enact laws governing foreign trade is the United States. Without federal consent, individual states are not permitted to create their own agreements. In the development of international trade laws, the legislative and judicial branches of the U.S. government are both involved.

The U.S. Constitution gives Congress the power to control international trade. The President may negotiate treaties with the Senate's consent, according to Article 2 of the U.S. Constitution. A U.S. Secretary of Commerce is appointed by the President to manage American efforts in international trade.

Sources Of International Trade Law

There Are Three Main Sources for International Trade Law −

  • International trade law is primarily derived from national laws.

  • All international treaties pertaining to the disciplines of international commercial law are considered international sources. There are three norms that are especially crucial: The Vienna Convention on the International Sale of Goods (1980) aims to offer a contemporary, standardised, and equitable framework for contracts for the international sale of commodities that enhances trade security. The Rome I Regulation (2008) lays out uniform guidelines for choosing the law that governs contracts with the European Union. The International Factoring Convention of 1988 was held in Ottawa.

  • For people engaged in international trade, a body of traditions and practises known as the Lex Mercatoria serves as a binding set of regulations. Codifying these uses is a goal that some private organisations have set for themselves. Universal Conventions and Practice for Documentary Credits, or "Incoterms," is a product of the International Chamber of Commerce.

Principles of International Trade Law

Major principles of international trade law are −

National Treatment

After imported items have entered the market, both imported and domestically produced goods should be treated similarly. The same ought to hold true for domestic and international trademarks, copyrights, and patents. These rules cover aspects of intellectual property rights that pertain to trade as well as trade in commodities and services.

Most Favored Nation

Every time a WTO Member lowers a trade barrier or opens a market, it must do so for goods or services from all WTO Members, regardless of the Members' economic size or level of development. This is guaranteed by the MFN principles. Every benefit granted to one nation must be distributed to all WTO Members in accordance with the MFN principle. Only WTO Members receive the most favorable treatment, albeit a WTO Member may grant an advantage to other WTO Members without also providing an advantage to non-Members.

United Nations Commission on International Trade Law (UNCITRAL)

The main judicial body of the United Nations system in the area of international trade law is the United Nations Commission on International Trade Law (UNCITRAL), which was founded in 1966. It is a legal organisation with global participation that has spent more than 50 years working to change commercial law. UNCITRAL seeks to unify and harmonise the laws of international trade.

It is important to distinguish UNCITRAL from the World Trade Organization (WTO), which was established in 1995 and continues the work of the GATT (General Agreement on Tariffs and Trade). While UNCITRAL deals with the rules of law applicable to private law subjects in international operations and is thus uninterested in issues relating to relations between states, such as the fight against dumping, countervailing duties, or import quotas, the WTO deals with trade policy issues, such as trade liberalization, the removal of trade barriers, and unfair trading practises.

The International Institute for the Unification of Private Law (Unidroit), founded in 1926 and headquartered in Rome, is not to be confused with UNCITRAL. Unidroit's mission is to study means and methods to modernise, harmonise, and coordinate private law, particularly commercial law, between states or groups of states and to achieve this goal by creating uniform legal instruments, principles, and rules.

Each of these groups has a specific function to perform in international trade law. In every aspect of the work done by these international organisations, France actively participates.


In a broad sense, protectionism and free trade represent opposite ends of the spectrum. No state is likely to identify with the extremes of the spectrum in reality. Generally speaking, states have sought policies that combine features of both free trade and protectionism. Later on, with the creation of the GATT and the WTO, The state's policies now more prominently include elements of free trade.

The prosperity of East Asian economies is proof of their skill in designing and implementing blends of free trade and protectionism. Despite the fact that the original GATT was heavily focused on markets, the presence of big This market orientation was somewhat reduced by the presence of many developing nations.

Frequently Asked Question

Q1. What is the importance of international trade law?

Ans. Laws pertaining to international trade are those sections of the law that deal with specific regulations and practices for regulating trade between nations. Trade between two private sector businesses in two different nations is another use for it.

Q2. Who regulates international trade?

Ans. The Department of Commerce (DOC) and the International Trade Administration are federal organisations that assist in trade regulation (ITA). The DOC is an agency of the executive government that promotes international trade, economic growth, and technical improvement.

Q3. Who handles international trade in India?

Ans. The Ministry of Commerce's Directorate General of Foreign Trade (DGFT) currently serves as the ITS's cadre controlling authority. With the development and execution of its policies, the DGFT, which has 38 regional offices spread out over India, significantly contributes to the promotion of India's international commerce.

Updated on: 06-Apr-2023

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