Commercial treaty
Encyclopedia
A Commercial treaty is a formal agreement between states
for the purpose of establishing mutual rights and regulating conditions of trade.
For example, the Methuen Treaty
was a commercial treaty between Portugal
and England
.
Another example, between the close of the Napoleonic wars
of 1815 and the year 1860, the tariff system of Great Britain
was changed from elaborate protection to practically complete free trade. An attempt had indeed been made in 1786 to modify the rigidly protective legislation of the 18th century. In that year Pitt concluded a commercial treaty with France
, providing for large reductions of duties in both countries.
But the treaty was swept away with the outbreak of the wars with France
, and accordingly the old system was still in force in 1815. The first important step, and in some respects the decisive step, towards modifying it was taken in 1824, under the policy of Huskisson. In that year, and again in 1825, great reductions were made in the duties on raw materials, especially on wool
, raw silk
, flax
and iron
, while considerable reductions were also made in the duties on manufactured goods. The most sharply contested of the changes was in regard to silks, which had been completely prohibited, and were now admitted at a duty of 30 per cent. A considerable breach was thus made in the protective system; and some further changes in the same direction were made in the next decade, especially under Lord Althorp in 1833. But in the decade from 1830 to 1840 the Corn Laws
were the chief subject of contention.
The great increase in population since the middle of the 18th century had made England a corn
importing country, especially with the rapid growth of manufactures in the early years of the 19th century. The first systematic Corn Laws
imposing duties on grain
had been passed in 1773. From 1816 onwards a series of measures were passed, all designed to maintain the high price of grain. The Act of 1816 prohibited the importation of wheat
when the price was less than 80s. a quarter (=$2.50 a bushel). In 1822 the prohibitive point was lowered to 70s. In 1828 the sliding scale was introduced, under which the duty went up and down as the price of grain went down and up; and it was against this form of the Corn Law that the great agitation led by Cobden and Bright was directed after 1830. For a long time the anti-Corn. Law agitation seemed to have no effect, although conducted with extraordinary skill and enthusiasm. In 1842, however, Sir Robert Peel made the first important concession, by modifying the sliding scale, his opponent, Lord John Russell, having proposed in the previous year a fixed duty of 8s. a quarter. In view of the bad harvest of 1845-46, and the famine in Ireland
.
In 1846, Peel surrendered, and proposed in 1846 the admission of grain with only a fixed duty of Is. a quarter as a registration fee. This change was carried, but Peel, being able to carry only a fraction of his party with him, was compelled shortly afterwards to resign. The Corn Laws had great political strength, serving as they did the interests of the landowners, whose hold on parliament was still very strong; but the general economic situation in Great Britain, from the rapid growth of the manufacturing population and the imperative need of more food, made the abolition inevitable. After having been maintained till the middle of the century, apparently with irresistible support, they suddenly collapsed under the strain of a season of exceptionally short crops. Both their continued maintenance and their final sudden abolition are in some respects divergent from the general course of British tariff history.
Sovereign state
A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...
for the purpose of establishing mutual rights and regulating conditions of trade.
For example, the Methuen Treaty
Methuen Treaty
The Methuen Treaty was an offensive military and commercial treaty between Portugal and England signed in 1703 as part of the War of the Spanish Succession....
was a commercial treaty between Portugal
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
and England
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
.
Another example, between the close of the Napoleonic wars
Napoleonic Wars
The Napoleonic Wars were a series of wars declared against Napoleon's French Empire by opposing coalitions that ran from 1803 to 1815. As a continuation of the wars sparked by the French Revolution of 1789, they revolutionised European armies and played out on an unprecedented scale, mainly due to...
of 1815 and the year 1860, the tariff system of Great Britain
Great Britain
Great Britain or Britain is an island situated to the northwest of Continental Europe. It is the ninth largest island in the world, and the largest European island, as well as the largest of the British Isles...
was changed from elaborate protection to practically complete free trade. An attempt had indeed been made in 1786 to modify the rigidly protective legislation of the 18th century. In that year Pitt concluded a commercial treaty with France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, providing for large reductions of duties in both countries.
But the treaty was swept away with the outbreak of the wars with France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, and accordingly the old system was still in force in 1815. The first important step, and in some respects the decisive step, towards modifying it was taken in 1824, under the policy of Huskisson. In that year, and again in 1825, great reductions were made in the duties on raw materials, especially on wool
Wool
Wool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
, raw silk
Silk
Silk is a natural protein fiber, some forms of which can be woven into textiles. The best-known type of silk is obtained from the cocoons of the larvae of the mulberry silkworm Bombyx mori reared in captivity...
, flax
Flax
Flax is a member of the genus Linum in the family Linaceae. It is native to the region extending from the eastern Mediterranean to India and was probably first domesticated in the Fertile Crescent...
and iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
, while considerable reductions were also made in the duties on manufactured goods. The most sharply contested of the changes was in regard to silks, which had been completely prohibited, and were now admitted at a duty of 30 per cent. A considerable breach was thus made in the protective system; and some further changes in the same direction were made in the next decade, especially under Lord Althorp in 1833. But in the decade from 1830 to 1840 the Corn Laws
Corn Laws
The Corn Laws were trade barriers designed to protect cereal producers in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports between 1815 and 1846. The barriers were introduced by the Importation Act 1815 and repealed by the Importation Act 1846...
were the chief subject of contention.
The great increase in population since the middle of the 18th century had made England a corn
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
importing country, especially with the rapid growth of manufactures in the early years of the 19th century. The first systematic Corn Laws
Corn Laws
The Corn Laws were trade barriers designed to protect cereal producers in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports between 1815 and 1846. The barriers were introduced by the Importation Act 1815 and repealed by the Importation Act 1846...
imposing duties on grain
GRAIN
GRAIN is a small international non-profit organisation that works to support small farmers and social movements in their struggles for community-controlled and biodiversity-based food systems. Our support takes the form of independent research and analysis, networking at local, regional and...
had been passed in 1773. From 1816 onwards a series of measures were passed, all designed to maintain the high price of grain. The Act of 1816 prohibited the importation of wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
when the price was less than 80s. a quarter (=$2.50 a bushel). In 1822 the prohibitive point was lowered to 70s. In 1828 the sliding scale was introduced, under which the duty went up and down as the price of grain went down and up; and it was against this form of the Corn Law that the great agitation led by Cobden and Bright was directed after 1830. For a long time the anti-Corn. Law agitation seemed to have no effect, although conducted with extraordinary skill and enthusiasm. In 1842, however, Sir Robert Peel made the first important concession, by modifying the sliding scale, his opponent, Lord John Russell, having proposed in the previous year a fixed duty of 8s. a quarter. In view of the bad harvest of 1845-46, and the famine in Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
.
In 1846, Peel surrendered, and proposed in 1846 the admission of grain with only a fixed duty of Is. a quarter as a registration fee. This change was carried, but Peel, being able to carry only a fraction of his party with him, was compelled shortly afterwards to resign. The Corn Laws had great political strength, serving as they did the interests of the landowners, whose hold on parliament was still very strong; but the general economic situation in Great Britain, from the rapid growth of the manufacturing population and the imperative need of more food, made the abolition inevitable. After having been maintained till the middle of the century, apparently with irresistible support, they suddenly collapsed under the strain of a season of exceptionally short crops. Both their continued maintenance and their final sudden abolition are in some respects divergent from the general course of British tariff history.
Further reading
- Barclay, T.Thomas BarclayThomas Barclay may refer to:*Thomas Barclay *Thomas Barclay , American merchant, consul, diplomat*Thomas Henry Barclay , New York lawyer, American loyalist, British official*Thomas Barclay...
, Bearing and Importance of Commercial Treaties in the Twentieth Century (1906)
See also
- International investment agreementInternational Investment AgreementAn International Investment Agreement is a treaty between countries that addresses issues relevant to cross-border investments, usually for the purpose of protection, promotion and liberalization of such investments. Most IIAs cover foreign direct investment and portfolio investment, but some...
- Free trade agreement