The Crisis in the International Trading System
Chapter 14: Trade Agreements: The Important Role of Transparency
All merchants may enter or leave England unharmed and without fear, and may stay or travel within it, by land or water, for purposes of trade, free from all illegal exactions, in accordance with ancient and lawful customs. This, however, does not apply in time of war to merchants from a country that is at war with us. Any such merchants found in our country at the outbreak of war shall be detained without injury to their persons or property, until we or our chief justice have discovered how our own merchants are being treated in the country at war with us. If our own merchants are safe they shall be safe too. Magna Carta, 12151 1. INTRODUCTION It is interesting, with all the problems the barons of England were having with King John in 1215, which the Magna Carta was drafted to deal with, that a free trade clause was included in the text of the charter.2 Of course, in 1215 international trade was a function of the movement of merchants. In the absence of all the market-supporting institutions that have evolved to facilitate the international movement of goods – what Douglas North (1987) calls ‘specialized interdependence’, whereby sufficient institutional constraints are in place to inhibit cheating, shirking and opportunism to a sufficient degree to allow exchanges to take place on an impersonal basis – merchants travelled with their goods. Goods were acquired by the merchant directly from a production unit or a fair in one country and then transported to...
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