History of international trade: Silk Route to GATT

Detail

1. Early trade: local first, luxuries later

• Why early trade stayed local: moving goods over long distances was slow and risky. Bandits, bad roads, deserts and storms could destroy a whole load.
• Result: most early trade was local, carried out within a small area, often by barter (swapping one good for another without money).
• Long-distance trade carried mostly luxuries for the rich: silk, spices, precious metals and gems. These goods were high in value and low in weight, so the risk was worth it.

2. The Silk Route

• Silk Route (Silk Road): an old network of land trade routes, about 6,000 km long, that joined Rome with China. It passed through India, Persia (Iran) and Central Asia.
• It was not one road. It was a web of caravan paths, oasis towns and mountain passes.

• The German geographer Ferdinand von Richthofen coined the term ("Seidenstrasse") in 1877.

• Goods carried:

Direction	Main goods
China → West	Silk, porcelain, lacquer
Rome/West → East	Roman wool, glass, precious metals (gold, silver)
India / Persia / Central Asia (middlemen)	Spices, gems, horses, other high-value goods

• Key nodes, from east to west:
• Chang'an (now Xi'an): capital of China under the Han and Tang dynasties; in Shaanxi province, on the Wei River (about 34°N). This is where the route began.
• Kashgar: oasis town in Xinjiang (China), on the western edge of the Tarim Basin. The northern and southern branches around the Taklamakan Desert met here.
• Samarkand: in present-day Uzbekistan, on the Zeravshan River. A major market of Central Asia.

• Merv: oasis city in present-day Turkmenistan. It was a gateway to Persia.

• More than trade: ideas, religions (Buddhism spread from India to China), technologies and diseases also moved along the route.

• UNESCO listing: "Silk Roads: the Routes Network of Chang'an-Tianshan Corridor" was inscribed as a World Heritage Site on 22 June 2014 [2].
• It was a joint nomination by China, Kazakhstan and Kyrgyzstan. It was the first stretch of the Silk Road put on the World Heritage List [2].
• The listed section is about 5,000 km long, from Chang'an/Luoyang to the Zhetysu region of Central Asia. It is part of a wider network of about 8,700 km that grew between the 2nd century BC and the 1st century AD [2].

• It has 33 component sites: capital cities, palaces, trading towns, Buddhist cave temples, posthouses, passes, beacon towers, sections of the Great Wall and tombs. 8 sites are in Kazakhstan and 3 in Kyrgyzstan; the rest are in China [2].

• Today: China's Belt and Road Initiative (BRI) borrows the Silk Road image for its land "belt" and maritime "road" (see world-transport-communication).

3. After Rome: Europe's commerce and the ocean route

• Fall of the Roman Empire → the old Rome–China land link weakened.
• 12th–13th centuries → European commerce (trade and business) grew again.
• Ocean-going ships → Europe could reach Asia by sea, so Europe–Asia trade widened beyond the land routes.
• Result: Europeans reached the Americas, which Europeans then called "discovered", and trade became truly worldwide.

4. The slave trade

• Slave trade: the forced capture and sale of human beings as property. From the 15th century, Portuguese, Dutch, Spanish and British traders captured Africans and shipped them by force across the Atlantic to work on plantations in the Americas.
• NCERT shows an 1829 slave-auction advertisement (Fig. 8.2).

• It made huge profits for over 200 years.

• Abolition (the order matters):

Country	Year it abolished the slave trade
Denmark	1792
Britain	1807
USA	1808

• Scale:
• About 12.5 million Africans were put on ships (Trans-Atlantic Slave Trade Database). The UN also states that more than 12.5 million Africans were taken to the Americas and the Caribbean and enslaved [3].

• Britannica gives 10–12 million carried across the Atlantic between the 16th and 19th centuries [4]. The gap between figures is because many died at sea during the "Middle Passage".

• Triangular trade: a three-sided trade loop across the Atlantic Ocean.

• Leg 1: European manufactures (cloth, guns, metal goods) were shipped to West Africa.
• Leg 2: enslaved Africans were shipped to the Americas and the Caribbean (the Middle Passage).

• Leg 3: plantation crops (sugar, cotton and tobacco) were shipped back to Europe.

• Links to geography:

• The trade supplied labour for plantation agriculture (large single-crop farms run for export) in the Caribbean, Brazil and the southern USA (see primary-activities-world).

• It created the African diaspora (people of African origin living outside Africa) across the Americas.

• Remembrance: UNESCO launched the Slave Route Project in 1994 to study the slave trade, its causes and its results [5].

5. The colonial pattern of trade

• Colonial pattern of trade: colonies sent raw materials to the ruling industrial countries and bought back finished goods from them.
• How it worked (cause → process → result):
• Industrial Revolution → factories in Europe needed raw materials and their workers needed food → demand rose for grain, meat and wool.
• Industrial nations imported primary products (raw goods from farms, mines and forests) from non-industrial regions.

• They exported value-added manufactures (goods made more valuable by processing) back to those same regions.

• Falling terms of trade:

• Terms of trade: how many imports a country can buy with a set amount of its exports.
• Over time, primary goods lost value compared with manufactures. So a colony had to export more and more cotton or wheat to buy the same amount of cloth or machines.

• Prebisch-Singer thesis (1950): Raúl Prebisch and Hans Singer argued that the terms of trade for primary exporters fall over the long run.

• India's case: the drain-of-wealth debate. Dadabhai Naoroji argued that colonial trade and payments drained India's wealth to Britain. India exported raw cotton and indigo and bought back British mill cloth.

• Late 19th century shift: primary-producing regions became less important. Industrial nations became each other's main customers.

6. World Wars, tariffs and the road to GATT

• During the World Wars, countries for the first time imposed:
• Tariffs: taxes on goods that cross a border, usually on imports.

• Quantitative restrictions: non-tariff limits on the quantity or value of goods that may be traded (for example, import quotas).

• The 1930 lesson: Smoot-Hawley

• The US Smoot-Hawley Tariff Act (1930) raised the average duty on dutiable imports from an already high 40% to 47% [6].
• Other countries hit back: about two dozen countries raised tariffs within two years [6].
• International trade fell by 65% between 1929 and 1934 [6]. World trade volume fell 25% between 1929 and 1933, and nearly half of that fall was due to higher trade barriers [7].

• Protectionism did not cause the Great Depression, but it made it worse and slowed recovery [7].

• Lesson learned: once tariffs start going up, they spread from country to country. After 1945, countries built rules to stop this happening again.

• GATT (General Agreement on Tariffs and Trade):
• Signed on 30 October 1947 by 23 nations at the Palais des Nations, Geneva [8]. It came into force in 1948.
• The 23 were 12 developed and 11 developing economies. India, Pakistan, Burma, Ceylon, China and Brazil were among them [8].
• The first round (Geneva, 1947) produced about 45,000 tariff concessions covering about US$10 billion of trade [9].
• There were eight rounds of negotiation in all [9]. Early rounds: Geneva (1947), Annecy (1949), Torquay (1950).
• The last, the Uruguay Round, took seven and a half years, almost twice the planned time, and 123 countries took part by the end. It covered goods, services such as banking and telecom, and intellectual property [9].

• From 1948 to 1995, GATT was the only multilateral rulebook for world trade [10].

• WTO: the World Trade Organization was set up on 1 January 1995. "GATT 1994" became part of it [10]. The WTO's work is covered in Section 7.

Feature	GATT	WTO
Nature	An agreement (provisional)	A permanent organisation
Start	Signed 1947; in force 1948	1 January 1995
Founding members	23 nations (India included)	Created by the Uruguay Round
Coverage	Mainly trade in goods	Goods, services and intellectual property

Prelims Hooks

• Silk Route: about 6,000 km, joining Rome and China through India, Persia and Central Asia. Ferdinand von Richthofen coined the term in 1877.
• UNESCO 2014: the Chang'an-Tianshan Corridor was a joint listing by China, Kazakhstan and Kyrgyzstan. India, Uzbekistan and Turkmenistan were not part of it, a common trap [2].
• Silk Route nodes, east to west: Chang'an (Xi'an) → Kashgar → Samarkand → Merv.
• Slave-trade abolition order: Denmark (1792) → Britain (1807) → USA (1808).
• Triangular trade: manufactures → Africa; enslaved people → the Americas; sugar, cotton and tobacco → Europe.
• Prebisch-Singer thesis (1950): the terms of trade of primary-product exporters fall over the long run.
• Smoot-Hawley Tariff Act: USA, 1930. Other countries retaliated and the Great Depression got worse [6][7].
• GATT: signed 30 October 1947 in Geneva by 23 countries, and India was a founding member [8]. It ran eight rounds, ending with the Uruguay Round [9].
• WTO was set up on 1 January 1995 and replaced GATT as the main body for world trade [10].
• Tariff vs quantitative restriction: a tariff is a tax; a quota is a limit on quantity or value (a non-tariff barrier).

Mains Points

• The colonial trade pattern locked colonies into exporting raw materials. Industrial countries took raw materials and sold back manufactures, so the terms of trade turned against the colonies (Prebisch-Singer, 1950). In India this drove the de-industrialisation and drain-of-wealth debate. It still explains why many developing countries try to add value at home (processing, "Make in India") instead of exporting raw ores and crops.
• The geography of the slave trade still shapes the world: plantation economies in the Caribbean, Brazil and the US South, the African diaspora, and Africa's loss of working-age people. It is a key case of trade driven by force rather than by comparative advantage.
• Protectionism spreads from one country to the next. Smoot-Hawley (1930) → retaliation by about two dozen countries → world trade collapsed (–65%, 1929–34). This showed that trade wars hurt everyone and led to rules-based multilateral trade under GATT (1947–48) and the WTO (1995). The same lesson applies to today's tariff disputes.
• Old trade routes keep coming back as strategy: the Silk Route's land corridor (UNESCO, 2014) and China's BRI show how trade routes carry influence as well as goods. India's answers include the IMEC (India-Middle East-Europe Economic Corridor) and the INSTC (International North-South Transport Corridor).