Islamic view on economic integration

This Article was published in
Pakistan Observer (October 2, 2009)
The Post (Saturday, October 3, 2009)
The Post (Print Version)(October 3, 2009)
The Frontier Post Page: 7 (Print Version) (October 4, 2009)

Hussain Mohi-ud-Din Qadri

The Arabian economy mostly consisted of trading people before the advent of Islam. International trade contributed significantly to that economy. The Arabian peninsula had quite a number of active trade centres. Trade routes to Abyssinia were from Hijaz to Palestine, Egypt and then Abyssinia. The ships used to sail from Jeddah through Bab-ul-Mandab to any of the Abyssinian ports.

Zafar and Suhar were old centres for the sea trade of Indians on the coastal soils of the Persian Gulf. Zafar was situated to the East of Hadrawat and was a known market for perfumes. Suhar and Waba were old markets and traders from Sindh, India, China and other eastern and western countries gathered there to participate in trade fairs held at these places. Before the dawn of Islam, these areas were under the jurisdiction of Jalanzi b. Mustakabar who charged a tax from the traders at the rate of 10 percent. He also hosted trade fairs. Among these fairs were those of Ukaz, an oasis between Taif and Nakhlah. The fair was held on 1-20 Dhul-Qadah, the 11th month of lunar (Islamic) calendar.

The direction of external trade of Arabian economy was mainly focused on China and Abyssinia. The Makkan traders used to take leather, glue and frankincense to Abyssinia. Woolen cloth and gowns were also exported to Abyssinia and bartered for food grains. In this way, the pre-Islamic Arabian economy had a lot of international trade links. A reference to trade caravans of the Quraish has also been made in the Holy Quran. In one of the chapters (Al-Quraish 106:2) the Quraish are reminded of the protection God provided to their caravans traveling in summer and winter.

The advent of Islam introduced new motivations and dimensions to the international trade of the Arabian economy. Muslims were encouraged, individually and collectively, to seek bounties of God and promote trade.

Islam also provides certain regulations regarding trade and it is compulsory for the traders doing business within the Muslim territory to abide by those regulations. According to the Muslim jurists, the following guidelines should be followed by Muslims traders while conducting their business affairs.

The seller should not praise his goods for the qualities they do not possess.

The seller should disclose the qualities, good or bad of his stock to the prospective buyer.

A trader should not hide the weight and quantity of his goods.

He should not keep the price a secret in a way that if the buyer comes to know of it, he will refuse buying.

All this is binding on all Muslims and business whether they are living in one country or the other. The trade links with the well-known trade centres and trade fairs in the world also continued during the Islamic era. International trade kept playing a very important role in the Arabia after Islam. The Muslims established trade relations with almost all the known countries in the world. They were great navigators and their ships touched the shores of India, China, Europe and Russia. Caravan traffic with the ‘Ship of the Desert’ was the common means of traveling and trade between different Muslims countries especially the pilgrimage caravan to Makkah.

In Islam, people are divided into two different classes for the purpose of collecting taxes. There is a world of Muslims called Dar-ul-Islam and the world of foes, Dar-ul-Harb. So the sources of revenue fall into two distinct categories:

The taxes imposed on Muslims are called zakat and ushr.

The taxes imposed on non-Muslims called Jizya, Kharaj and a tax on non-Muslims traders called import duty or tariff called ‘ushr’.

As is shown above, in the pre-Islamic days, the Arabs and the neighboring Byzantine and the Sassanian trade caravans were accustomed to sell their commodities in one another’s territory. It was customary for the market chiefs to impose duty at the rate of ten percent on the goods brought for trading by foreign traders in their territory. This kind of trade levy looks like the present-day customs duty. There does not appear any sharp distinction between the market toll at octroi posts between the trade levy on goods imported for sale. The term ‘ushr’ and perhaps ‘maks’ equally applied to both.

On the system of ‘ushr’, collection on merchandise goods, we have numerous traditions in which the Holy Prophet (PBUH) condemned it in the severest terms. To quote a few traditions,

The collector of maks will not enter paradise.

The collector of maks will not be questioned for anything. He will be caught as such and thrown in the hell fire.

In his agreement with some Arab tribes, when they embraced Islam en mass after conquest of Makkah, the Holy Prophet (PBUH) decreed that they would no more be subjected to the payment of ushr which was a common practice. Thus the Jurists generally held the system of market levy to be a jahili practice which the Holy Prophet (PBUH abolished. Thus we can say that Islam rejects any customs duties among Muslims countries and this becomes a plus point in the formation of customs union among the Muslim counties in which they will be having free trade among themselves. This clearly means that during the early period of Islam there was no trade toll on the international movement of commodities. This position is fully reflected in Mawardi’s assertion that nothing lies on the international movement of trade commodities and that in the Dar- ul- Islam this kind of levy is unlawful.

As regards the common external tariff, it is reported that during Caliph Umar’s time the traders complained to the Caliph that the Muslim traders had to pay the toll of the tenth of their saleable commodities according to the pre-Islamic customs while selling their merchandise in the non-Muslim territories. In reciprocity Caliph Umar order the cancellation of the same rate from traders from outside the Muslim state coming to trade in the Muslim land. However, he also ordered not to impose any ‘ushr’ (Customs duty) upon a Muslim or on a dhimmi, if the former had paid zakat and the latter jiziya in accordance with the pact made with them. Ushr was levied on the people of Harb only when they sought permission to trade in Muslims lands. ushr collectors were appointed who collected a levy of 10 percent from the Herbi traders, five percent from the dhimmi traders and two and a half percent from the Muslim traders.

The rationale behind different rates of the above levy as imposed by Caliph Umar on different categories of traders was that the rate of 10 percent on Harbi traders was to reciprocate and to balance the same rate collected from the Muslims traders in the Herb lands.