About Zolleverein And Its Importance In The Unification Of Germany (Essay Sample)

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Zollverein
In 1815, after Napoleon was defeated, the political structure in Germany was split into thirty-nine different states of the German confederation. This Confederation contained sovereign states in which joint action by all the states required unanimity. Austria and Prussia were the most powerful states in the German Confederation. The individual states had protectionist tendencies and had complicated trade barriers. The idea that the different states with their customs borders were a hindrance to economic development and trade was widely held by different stakeholders.
Zollverein is arguably the most important regional free trade agreement of the 19th century. This was the first time that trade barriers between independent states were removed. A body was also set up to ensure setting of proper tariffs. The importance of this agreement was further magnified by the fact that before the union of German states, they were divided into smaller units which were small economic zones which enacted their tariff collection at various points along their borders. After the Napoleonic era, the system was simplified, however, in the 19th century, there was still administrative, political borders in the various German states CITATION McK15 \l 1033 (McKay, Hill and Buckler)
The various customs points on the borders were becoming problematic because the customs barriers were crippling internal trade and in extend, affecting the economic growth and development of the different states in Germany and its neighbors. Business people trading between Austria and Hamburg, or Switzerland and Berlin had to go through ten different states, and in the process, they had to abide by ten different customs regimes and had to pay ten different transit dues or taxes.
The establishment of Zollverein lead to tariff barriers being abolished among the member states, and a single external tariff was established and implemented for the non-members. In the long-run, the reduced trade barriers had a positive economic impact on both growth and development in the region. Since Zollverein was largely a customs union, it was however not similar to multilateral free trade for any state that joined it. Trade diversion was a common and possible outcome. But, most of the trade that was being carried out was between the German states. However, most imports into the German states were not products or goods produced in Europe but, from colonial territories. Thus, the trade diversion effect of the Zollverein was limited, and therefore, it’s rather viewed as trade liberalization among the German states CITATION Kit78 \l 1033 (Kitchen)
Free trade agreements normally do not provide economies of scale for the customs ...