CHAPTER ONE
GENERAL INTRODUCTION
1.1 Background to the Study
International Trade has been of immense importance in the existence of the nations of the world and its economy because no nation is completely self-reliant or sufficient. Also, the needs and wants of people in all parts of the world are better served by exchanging goods and services.1 Trade increases the standard of living for all modern countries. For some, foreign market takes a third to a half of the total output and the standard of living depends crucially on the international division of labour that foreign trade permits.2 However, there are opinions to the effect that international trade has negative effects on the standard of living of the nations of the world and consequently, trade barriers are necessary to protect the earth‘s natural environment, reduce domestic unemployment and also prevent the exploitation of the world‘s impoverished workers.3
International trade has played and continues to play critical role in the ability of countries to grow, develop and be economically powerful throughout history. International transactions are becoming increasingly important in recent years as countries seek to obtain the more benefits that accompany increased exchange of goods, services and factors. It is worthy to note that little is known about the earliest trade. However, English flint used to make primitive tools, which was widely traded in Europe thousands of years before Christ, and so was the salt from the mines in Central Europe. Moreover, the Egyptians as far back as 3000 B.C. ranked far in Africa in search of gold, antimony and slaves. By 1700 B.C., the Cretans traded extensively by sea.4 Every sovereign nation is free to establish laws, taxes and regulations governing its foreign trade. Initially, these nations used certain policy instruments to protect their country and citizens that are players at the international market against certain consequences that might arise as a result of unrestricted trade practices and thereby interfere with free trade.
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