Chapter II explores trade patterns of Arab countries. It addresses some of the
obstacles Arab countries face in acceding to the WTO. Chapter II also examines the
effects of accession to the WTO on selected sectors such as agriculture and oil for Arab
countries. Chapter II concludes that Arab countries are not active participants in the WTO
work. Arab countries also lack effective missions in Geneva solely dedicated to the work
of the WTO. Moreover, the dream of Arab regional trade agreement or common market
has not come true, despite the fact that free trade once profoundly reigned in the region,
and despite the fact that many Arab countries are bound together by ties of common
culture, ethnicity, and language.
Chapter III addresses the status of international trade agreements into the domestic
law of Jordan. It also tackles the relationship between the National Assembly, the
executive branch, and the judiciary in respect of international trade, and the bodies in
Jordan that have the power to enter into international agreements. It touches on the legal
effects of international agreements, and the cases where international agreements prevail
over domestic law. Chapter III also offers insights into Jordan’s accession to the WTO.
Further, it uncovers commitments Jordan undertook in its accession to the WTO as a case
study for other Arab countries. Chapter III concludes that government agency conflict in
Jordan appears in the overlapping jurisdictions of the different executive authorities
rather than between the executive and the National Assembly. In its accession, Jordan
undertook onerous terms and conditions as a price for accession to the WTO. Jordan did
not benefit from any transitional period in its accession to the WTO except in
implementation of commitments on tariff reduction. Jordan met some of its WTO
commitments at the time it entered the WTO. However, Jordan was committed to meet
other requirements after accession over time. Many areas of implementation of the WTO
agreements require heavy administrative and financial investment.
Chapter IV scrutinizes U.S.-Jordan Free Trade Agreement including its
environmental and labor provisions. Chapter IV concludes that the bilateral trade
agreement between the U.S. and Jordan will lead to trade dependency on the U.S. market.
The approach adopted in drafting the bilateral trade agreement is a cut and paste approach
in which U.S. laws were incorporated into the agreement with few changes in article,
numbers or words. The entire bilateral trade agreement was an adhesion or
unconscionable contract submitted by the U.S. as a fait accompli. Jordan was a “rule-
taker” rather than a “rule-maker”. The parties in the trade agreement entered into
asymmetrical commitments in areas such as services and intellectual property.
Chapter IV concludes that the free trade agreement between the U.S. and Jordan
would have been of little value, giving the volume of trade between the parties, except for
including environment and labor within the text of the agreement. The U.S. acted as
demander for including labor and environment within the free trade agreement. The
environmental and labor provisions of the free trade agreement represent material steps in
advancing the environmental and labor agenda by linking the free trade agreement with
non-trade provisions. However, these articles fall short of expectations. The trade
agreement does not prohibit the parties from encouraging trade by relaxing domestic
environmental and labor laws. Instead, the free trade agreement simply urges the parties
9
not to relax their laws. Free trade agreement does not define the relationship between the
trade agreement and the multilateral environmental agreements. The free trade agreement
includes a scapegoat clause that allows each party not to effectively enforce its
environment or labor laws on the basis of reasonable exercise of discretion or bona fide
decision to allocate resources. Chapter IV concludes that environment and labor will be,
as they have traditionally been viewed, secondary to trade agreements. The U.S. should
not use Jordan as a pawn to advance its own agenda on environment and labor. In Islamic
jurisprudence, there are historical links to trade.
10
CHAPTER I
ISLAMIC LAW AND INTERNATIONAL TRADE
I. Links to the Past
2
As for the sea, we hold it is as the way of dry land. Allah said:
Allah it is who subdued to ye the sea that vessels may sail thereon by his
command and that ye may seek of his bounty. Therefore, he has given
permission that he who wills may trade thereon and I hold that no
obstacle shall be placed between it and any of the people. For the dry land
and sea alike belong to Allah. He has subdued them for his servants
to seek of his bounty in both of them. How then should we intervene
between Allah’s servants and their means of livelihood?
3
Muslims believe that Islam is the last religion. Islam is called the seal of religions.
Islam, unlike the Talmud for Orthodox Judaism or Bible in Christianity, not only covers
moral or spiritual teachings, but also it covers every aspect of life such as trade. Islamic
shari’a places religion as well as economics in the consciousness of Muslims. Therefore,
Islam is comprehensive in coverage. Some rules in Islam may be stretched out to meet
current issues while maintaining certain core principles as static.
4
Indeed, Islam is a
durable living force.
Free trade is about people selling and buying as they want without barriers or
obstacles. Free trade has links in Islam. This proposition is to refute any doubt that free
trade is alien to Arab countries and a response to the myth that Islamic law is passé or just
is not applicable to modern trade law. This proposition is also an opportunity to discuss
matters beyond interest, the centerpiece of Islamic economics.
5
However, Islamic law and
2
The perspective presented in this chapter is neither perfect nor an oversimplification of a complicated
topic. The researcher is not a scholar of Islam and certainly learns about Islamic teachings on a daily basis.
The whole history of trade in Islam will not be discussed in this chapter. This chapter will not involve a
process whereby selective ideas are extracted from Islamic law to claim that Islam and free trade are the
same. This chapter is suitable for Westerners who may not have heard about Islam and free trade until
recently, but not Arabs who may know it well. This chapter also serves to endear the topic to the ears of
Arabs because they do need to look back in order to move forward. Moreover, the purpose is to write a
chapter that would invigorate the reader to explore, beyond the scope of the chapter, the question of trade
and Islam.
3
Sermon delivered by the Caliph ‘Umar Ibn ‘Abd Al-‘Az¯iz. See Al-Khal¯ifah Al-‘¯adil ‘Umar Ibn ‘Abd
Al-‘Az¯iz, Kh¯amis Al- Khulaf¯a’ A R¯ashid¯in [The Fifth Rightly-Guided Caliph ‘Umar Ibn ‘Abd Al-\
‘Az¯iz], Li-Ab¯i Muhammad ‘Abd All¯ah Ibn ‘Abd Al-Hakam; Riw¯ayat Ibnihi Ab¯I ‘Abd All¯Ah
Muhammad, Mur¯aja’ah Wa-ta’l¯iq Ahmad ‘Abd Al-Taww¯ab ‘Awad 101 (D¯ar al-Fad¯ilah 1994).
4
These core principles are stated in the discussion of sources of law in Islam, p. 15.
5
See Timur Kuran, The Discontents of Islamic Economic Morality, 86 Am. Econ. Rev. 438, 439 (1996)
(Islamic economics is dedicated to restructuring economic thought and practice on the basis of fundamental
Islamic teachings. Its founders were Indian Muslims in the 1940s. Sayyid Abu ‘l-A’la Maududi coined the
term “Islamic economics” around the time of India’s partition. Afterward, Pakistanis have made the largest
contribution to the literature. The blanket prohibition against interest became the centerpiece of Islamic
economics. Attention then turned to issues such as rules of barter, rights of slaves, and transactions. The
11
economics do not adopt free trade as the single theorem per se or economic code of
Islam. There are limitations on free trade in Islam such as prohibition of trade in pork and
alcohol. International trade in Islam is trade with an Islamic “purifier”. This is an Islamic
market economy.
According to the teachings of the Prophet Muhammad (s.a.w), the pursuit of trade
and profit are not inferior but honorable.
6
Allah’s choice of prophet, who was a trader by
profession from a trading society, highlights the importance of trade.
7
The dominant tribe
in Mecca, Quraysh, earned its livelihood for decades selling commodities for a profit.
8
Camel caravans, originating in the Middle East, are well known in history for travel along
major trade routes.
The holy Qur’an is filled with numerous verses using the language of trade. For
instance, it states, “O ye who believe! Eat not up your property among yourselves in
vanities; But let there be amongst you traffic and trade by mutual good will”.
9
This verse
signifies trade on the basis of mutual consent free from undue interference. The Qur’an
also states, “For the covenants (Of security and safeguard Enjoyed) by the Quraysh, Their
covenants (covering) journeys by winter and summer- Let them adore the Lord of this
House, Who provides them With food against hunger, And with security Against fear (of
danger)”.
10
intended effect of Islamic economics is to reform human nature. The goal of Islamic economics is to
transform selfish and acquisitive Homo economicus into a paragon of virtue, Homo Islamicus). Although
interest and Islamic banking is the first and perhaps the most interesting application of Islamic economics
relevant to modern times, interest and Islamic banking has been written about to death.
6
S.A.W letters are abbreviations for the Arabic words “Salla Allahu ‘Alaihi Wa Sallam”. It is an Islamic
term of respect typically following a reference to the name of the Prophet Muhammad. “Peace be Upon
Him” is used by English speaking Muslims. However, “Peace be Upon Him” does not give full meaning to
“Salla Allahu ‘Alaihi Wa Sallam” words. Therefore, the words “Salla Allahu ‘Alaihi Wa Sallam” should be
used. See Glossary of Islamic Religious, Banking & Financial Terms, 6 J. Islamic L. & Culture 135, 148,
150 (2001). To determine if profit is profiteering, there must be an analysis of prevalent market prices and
trading practices among similar merchants.
7
See Chibli Mallat, Commercial Law in the Middle East: Between Classical Transactions and Modern
Business, 48 Am. J. Comp. L. 81, 92 (2000) (a long-standing tradition of Islamic civilization is its
association with and the centrality of trade. The tradition relating to the other great monotheistic epigones
in the figures of Abraham and Jesus does not acknowledge the centrality of trade and commerce in any
similar way. In the case of Jesus, the episode of the Temple merchants even points in the opposite
direction, with the mercantile pursuit of wealth depicted in a derogatory manner. Neither classical
Christianity or Judaism seems to have extolled the virtues of commerce in such a detailed or enthusiastic
argument for the commercial professions as did Dimashqi in his Mahasin al-tijara, The Virtues of
Commerce).
8
See Gene W. Heck, The Economic Dynamic of the Early Islamic State 43-44 (1995).
9
See Qur’an 4:29. See also Qur’an 2:282, 17:66, 24:37, 35:28, and 62:11.
10
Id. 106:1-4. The historical background of these verses is that the Quraysh, the dominant tribe in Mecca,
conducted international trade by setting out two caravan journeys, one from Mecca to the warmth of Syria
in summer and the other to the cooler Yemen in winter, to sell cheaper leather and clothing than those made
in Syria and Yemen. Thus, trade provided them with a living. However, for the safety of these caravans,
trade agreements were concluded with the tribes on the routes. In return, the Quraysh, agreed to collect
these tribes’ goods to sell, and on the way back hand them over other goods. See Patricia Crone, Meccan
Trade and the Rise of Islam 109, 205-209 (Princeton U. Press 1987).
12
Discussion of international trade and its relevance will be limited to Islamic law.
11
However, before discussing Islamic law and its relation to international trade it would be
helpful to provide a background of Islamic law, one of the world’s major legal systems
along with Jewish law (Halacha), civil law, and common law. The Discussion of Islamic
law and its sources is essential to understanding the importance of these sources on the
relationship between free trade and Islam.
A. Sources of Law in Islam
The law or shari’a in Islam may be thought of as being composed of at least two
parts: revealed and non-revealed.
12
The revealed form of shari’a has two proper sources:
the Qur’an (the holy book) and the sunna (traditions based on the hadith, sayings and
actions of the prophet).
13
Non-revealed sources of shari’a, developed by Muslim jurists
after the revelation of the Qur’an and the sunna, include ijma (consensus of Muslim
scholars on a point of law) and qiyas (a sub-ijtihad species of strict analogical reasoning).
These are the authoritative sources of jurisprudence (usul al-fiqh).
14
Usul al-fiqh
incorporates both deductive (from broad general principles in the law to a particular case)
and inductive (from a particular case to general principles) methods of reasoning. Other
sources of non-revealed shari’a include ijtihad (individual intellectual effort and wider
independent reasoning), istihsan (equity or juristic preference), istishab (presumption of
continuity), istislah or maslaha (opinion based on public interest), darura (necessity), urf
(custom), and fatwa giving (responsa) of muftis (jurisconsults) such as the Egyptian
grand mufti Muhammad ‘Abduh.
15
11
For a Christian biblical and theological themes on international trade see Daniel Rush Finn, Just Trading:
On the Ethics and Economics of International Trade 47-87 (Abingdon Press 1996) (stating that it would be
a serious mistake to expect to find in the biblical sources a neatly transferable ethic of international trade
for Christians today. At the same time, however, it would be a mistake to presume that international trade is
a purely modern phenomenon).
12
Shari’a is an Arabic word meaning way. The shari’a was compiled during the first three centuries after
Muhammad’s (s.a.w) death. See Ahmed Zaki Yamani, The Eternal Shari’a, 12 N.Y.U. J. Intl. L. & Pol.
205, 205-06 (1979).
13
The Qur’an is divided into 114 chapters, known as surahs. Each surah is divided into verses, called
“ayas” which mean “signs”, referring to signs from and of Allah. There are roughly 6000 verses. See
Bhala, infra n. 21, at 680.
14
See William M. Ballantyne & Howard L. Stovall, Arab Commercial Law: Principles and Perspectives
28-30 (ABA 2002). See also John Walbridge, Logic in the Islamic Intellectual Tradition: The Recent
Centuries, Vol. 39 No. 1 Islamic Stud. 55, 68 (2000) (Islamic law is divided into two disciplines: fiqh,
which the content of the sacred law, and usul al-fiqh, the principles by which it is deduced. Usul is a system
of rules by which new law is derived from a fixed body of source materials. It deals with such problems as
how to derive a general rule from a known particular case, how words can legitimately be interpreted, and
so on).
15
See Hasbullah Haji Abdul Rahman, The Origin and Development of Ijtihad to Solve Modern Complex
Legal Problems, Vol. 43 The Islamic Q. 73, 75-76 (No. 2, 1999) (ijtihad must not be exercised as to the
existence of Allah, the truism of the prophets of Allah, and the authenticity of the Qur’an. To exercise
ijtihad a Muslim has to be knowledgeable of the Qur’an, sunna, and usul al-fiqh. A Muslim also must be a
good Muslim, pious and law-abiding, and not influenced by heresy, just, and reliable). See also Islamic
Legal Interpretation: Muftis and their Fatwas 4-32, 286-296 (Muhammad Khalid Masud et al. eds.,
Harvard U. Press 1996) (a fatwa is a nonbinding advisory opinion to an individual questioner (mustafti) in
connection with ongoing human affairs. A fatwa may cover issues concerning mosques, intergenerational
13
To establish direct support for a legal proposition a Muslim legal scholar should be
able to pinpoint to a verse of the Qur’an, or at least a tradition or hadith of the Prophet
Muhammad (s.a.w). While the Qur’an provides the written law, the sunna supplies a sort
of case law, consistent with the Qur’anic text. The sunna embodies the application of the
Qur’an’s written law to concrete disputes and hypothetical questions that arose during the
prophet’s life. Some sunna cases simply explain the Qur’anic principles and rules. Some
cases interpret the Qur’anic text by providing new insights into the written law. Some
provide new principles and rules, supplementing the Qur’an’s protected knowledge.
If direct support of a legal proposition in the Qur’an and sunna is not possible, then a
Muslim legal scholar seeks an instance when all legal scholars or jurists agree on a
particular point of law or interpretation. Consensus may be relied upon as a valid source
of law. Use of analogical reasoning, qiyas, is quite strict. First, one must find a verse in
the Qur’an, a sunna of the prophet, or a rule on which consensus was achieved as the
point of departure. Then the direct cause, purpose or rationale, narrowly conceived, must
be determined, and the relationship between the two concerns, the one in which there is a
rule and the one to which one is considering extending the rule, must be elucidated in
such a way as to demonstrate that the rule should be extended. For example, the Qur’anic
prohibition of drinking wine extends to other alcoholic beverages without concern about
gray areas. On the other hand, the relaxation of the duty to fast in cases of illness and
traveling cannot be extended so easily.
16
Applying the concept of hardship to the
deliberation is not helpful because travelers would not always find fasting a hardship.
Moreover, hardship is a very broad and fuzzy concept. The divine purpose or cause of
the rule is not mere hardship, and so extension of the relaxation would not be discrete or
defined.
All Muslim scholars agree that the Qur’an is the core of Islamic law. However, there
is disagreement among them about the rank of other sources of Islamic law.
Consequently, there have arisen four main schools of law in Sunni: the Hanafi, Maliki,
Shafi’i, and Hanbali.
17
Hanafi scholars rely on reason and opinion, using analogy and
transmission of property, and marriage of children, and banking operations and interest. Fatwa began as a
private activity that was independent of any state control before being transformed into a mechanism of
religious legitimization. The formulation of fatwa is patterned after a question-answer model. Important
muftis in the pre-modern era were Mu’adh b. Jabal, Ibn ‘Abbas, and Ibn Rushd. Modern era muftis include
Muhammad Sayyed Tantawi, grand mufti of the Egyptian Republic and head of Dar al-ifta’, Makhluf
(Fatwa Office), al-Qaradawi, and ‘Abd al-‘Aziz b. ‘Abd Allah Ibn Baz.). An example of the use of fatwa
as a mechanism of religious legitimization is the plan of Egypt’s Ministry of Religious Affairs in 2004 to
connect all 5,000 of Cairo’s mosques to a city-wide wireless network, so that five times a day the Muslim
call to prayer [adhan] could be broadcast in a single voice, in the same instant. To counter criticism for the
idea as bid’a (irreligious innovation), the Ministry obtained several fatwas.
16
See Gamal M. Badr, Islamic Law: Its Reaction to Other Legal Systems, 26 Am. J.Comp.L. 187, 189
(1978).
17
Islam embraces two principal branches: Sunnism, the majority faith, and Shi’ism. The most important
group in Shi’ism is the Twelvers. Other Shi’ism schools include Ismailism and Zeydism. See Yann
Richard, Shi’ite Islam: polity, ideology, and creed 1, 5-9 (Antonia Nevill trans., Blackwell 1995) (Shi’ites
are Muslims, like the Sunnis, but there are differences between them. Unlike Sunnism which insists on the
arbitrary will of Allah, Shi’ism proclaims that Allah can only act within the bounds of justice. The Imam in
14
equity as sources of law. The Maliki school requires strict application of the sunna of the
Prophet and minimizes the role of opinion. The Shafi’i school has tried to reconcile the
Maliki and Hanafi principles.
18
The Hanbali school is well known for its strict adherence
to the text of the Qur’an and the sunna. Analogy is recognized as a source of Hanbali
law.
The shari’a tries to describe all possible human acts, classify it as obligatory,
recommended, neutral, objectionable, or forbidden by Allah (s.w.t), the supreme
legislator.
19
Islamic law addresses matters ranging from the timing of daily prayers and
prohibitions against eating certain foods to marriage, inheritance, and commerce. The
Qur’an speaks much more explicitly and completely about personal status (marriage and
inheritance), morality, and an individual’s relationship with Allah (s.w.t) than it does
about commerce.
20
With respect to the daily, private lives of all Muslims, Islam has five pillars that are
the essential obligations. These are: (1) the profession of faith (the Shahada which
affirms monotheism in its first part, and the authenticity of Prophet Muhammad (s.a.w) in
its second part as it states that “There is no God but Allah; Muhammad is the messenger
of Allah”), (2) regular prayer (called salat which is performed five times a day), (3)
compulsory charity (called zakat), (4) fasting during the month of Ramadan (called
sawm), and (5) pilgrimage (the Hajj).
21
Shi’ism plays a fundamental role in the relations between Allah and man. Moreover, Shi’ite doctrines are
based on collections of traditions quite distinct from those of the Sunnis. Shi’ite doctrine varies noticeably
from Sunni as regards inheritance and marriage). See David Bonderman, Modernization and Changing
Perception of Islamic Law, 81 Harv. L. Rev. 1169, 1174 (1968) (schools of law in Sunni appeared in the
first and second centuries of Islam. They developed initially due to geographical separation-one at Medina,
one at Kufa in Iraq, one in Syria- for example. After a few centuries, each school became personalized and
took the name of its leading scholar. Each school developed its own body of legal doctrine, but they were
similar in broad precepts. They disagreed as to particular points of law).
18
Al Shafi’i, the founder of al- Shafi’i law school, has been known as the founder of Islamic jurisprudence.
He was the first jurist to compile and systematize Islamic sources of law.
19
S.W.T letters are abbreviations of the words “Subhanahu Wa Ta’ala” which means that Allah is purified
of having partners or sons. When the name of Almighty Allah is pronounced, a Muslim is to show his
respect to him by reciting these words. See Glossary of Islamic Religious, Banking & Financial Terms,
supra n. 6, at 153.
20
For an interesting discussion of Islamic law see M. Cherif Bassiouni & Gamal M. Badr, The Shari’ah:
Sources, Interpretation, and Rule-Making, 1 UCLA J. Islamic & Near E. L. 135, 149 (2002) (the Qur’an
and the sunna contain the greater number of norms applicable to the areas of criminal law, family law,
contracts and obligations, procedure, and inheritance law as compared to other subjects within the
mu’amalat category (societal relations and individual interactions). Being a book [Qur’an] of spiritual
guidance and not a legal code, it is not surprising to find only 500 verses with legal content).
21
See Raj Bhala, Theological Categories for Special and Differential Treatment, 50 U. Kan. L. Rev. 635,
677 (2002). Muslims, both Sunnis and Shi’ites, are under the ritual obligation to accomplish hajj to the
holiest sites in Mecca at least once in their lifetime. Shi’ites give importance to visiting the tombs of saints.
The great centers of Shi’ite pilgrimage in Iraq are Karbala, Najaf, Samarra, and Kazemeyn. The great
center of Shi’ite pilgrimage in Iran is Mashhad. See Richard, supra n. 17, at 8-9.
15
II. The Role of Islamic State
Medina, known previously as T¯abah, was much poorer than Mecca because its
people were not merchants. Medina had no pilgrimage destination like the Ka'ba. Medina
also experienced deep-rooted enmity between groups of its citizens.
22
After his arrival in
Medina, Prophet Muhammad (s.a.w) established a Mosque (Masjid) for worship and
education. His next act was to create a new set of trade regulations. These were based on
the principles of no restrictions.
23
Neither did Prophet Muhammad (s.a.w) nor did the
four Rightly-Guided Caliphs (Al-Rashidin) who succeeded him, directly engaged in trade
and competition.
24
They regulated trade so as to prevent unfair trade, deception or
fraud.
25
However, later Islamic governments tempted by profitability, competed with
enterprises to the detriment of their societies.
In Islamic society, like in most others, some have more resources than others and
some are gifted with more abilities than others.
26
In other words, people are not equal in
terms of resources and abilities. The role is for the individual himself to make an effort in
the direction of increasing his share.
27
Many Muslim jurists agree that a Muslim must do
his utmost to earn a livelihood.
28
They assert the negative effects of subsidies. Muslim
22
See Muhammad Al-Ghazali, Understanding the Life of the Prophet Mohammad 155 (Intl. Islamic Fedn.
Student Org. 1997). Due to the sanctuary of Mecca, trade created an environment where rivalry was
foregone even among enemies. Qur’an states, “Nor wickedness, Nor wrangling In the Hajj. It is no crime in
you If ye seek of the bounty Of your Lord (during pilgrimage)”. See Qur’an 2:197-198.
23
After the persecution of the newly Muslims at the hand of the people of Mecca became unbearable, Allah
ordained the Muslims to migrate, Hijra, to Medina. See Abd Assamii Al-Misry, Al-Masrif Al-isl¯Am¯i
`llm¯iyan Wa-`Amal¯iyan [Islamic Bank in Theory and Practice] 7 (Maktabat Wahbah 1988) (ranking free
trade as the first characteristic of the new regulations in Medina followed by justice, avoidance of cheating,
and monopolies).
24
Caliph Umar said that the ruler should not trade because when he involves himself in trade he has it
entirely for himself and to the detriment of others, even if he does not like to do so. See ‘Ubayd, supra note
3, at 103.
25
Prophet Muhammad (s.a.w) objected to some cases of deception, known in Islam as Najsh, when one
raises the prices of goods, in an auction, without the intention of buying. He considered the practice
improper. See KHAN, infra n. 42, at 198. Other example of objections involved alteration of measure and
weight in goods. The Qur’an commands that full measure and weight be given fairly in trade. The Qur’an
states, “Woe to those who when they have to give by measure or weight to men, give less than due”. See
Qur’an 83:1-3. Prophet Muhammad (s.a.w) acted in determining the measures upon verse 83:3. A special
institution was established in Islam, known as al-hisba, to regulate standards and measures of goods to
prevent deception for consumers. Additionally, Islamic jurisprudence prohibits selling below market price.
For example, Caliph Umar bin al-khttab directed another person, who sold goods below the price available
in the market, and demanded him either to raise the price or to leave the market. See Munazzmat Al-
Mu'tamar Al-Isl¯am¯i, infra n. 48, at 118, 163.
26
The Qur’an states, “It is He Who hath made You (His) agents, inheritors of the earth: He hath raised You
in ranks some, above others”. See Qur’an 6:165. The Qur’an also states, “Allah has bestowed His gifts Of
sustenance more freely on some Of you than others”. See Qur’an 16:71, 4:32. See also Sayyid Abu ‘L-A’la
Maududi, Towards Understanding the Qur'¯an, VOL.IV 344, 345 (Zafar Ishaq Ansari Trans., Islamic
Found. 1988).
27
See Qur’an 62:10.
28
The Qur’an stresses “Will Allah change the condition Of a people until they Change their own inner
selves”. Id. 13:11. Caliph Umar emphasized that no one should refrain from seeking a livelihood and say,
O Allah! Give me sustenance, for the sky will certainly not rain gold and silver. For more on opinions of
jurists see M.Umer Chapra, Islam and the Economic Challenge 232 (Islamic Found. 1992).
16
jurists tend not to support the arguments made for subsidies that they alleviate poverty
and increase equality and efficiency.
29
By the same token, infant industries should not
depend on state subsidies. Subsidies should be temporary. Nevertheless, the Islamic state
has the role of addressing social injustice through available mechanisms such as Zakat,
Islamic rules of inheritance, and taxes. These mechanisms can be used to redistribute
wealth.
The role of the early Islamic state was confined to provide necessities such as public
services and law enforcement.
30
The state should be a minimal state in terms of being
involved in trade.
31
The state should not be in the business of making profit. When the
Islamic state relaxes its grip on trade, prosperity may flourish for society.
A. The Administration of Tariffs in the Early Islamic State
The most visible barrier to trade is a tariff, a tax imposed on imported products at the
border.
32
Islam recognizes a number of taxes. These taxes fall into four main categories.
The first is Zakat, an obligatory religious tax, calculated annually on a minimum of
possessions at a fixed rate paid to assist the poor as commanded by the scripture.
33
The
second is Sadaqa, a voluntary tax on every Muslim.
34
Each Muslim, if he agrees to pay
Sadaqa, pays from his own money according to his capacity and for the benefit of the
eligible, such as the poor.
35
The third is Ghanima which is the share of the Islamic
government from the proceeds of war.
36
In modern times, where war may be rare,
Ghanima is inapplicable. The last tax is known as Jizya, a tax imposed on the people of
29
Id. 292.
30
Government may need to deliver public services because of free-rider problems, otherwise these services
would not be produced.
31
For discussion on the role of the government see Muhammad Akram Khan, Public Finance in Islam,
40.2 Islamic Stud. 227, 231, 251 (2001) (public expenditure in Islamic economy will follow hierarchy of
needs giving priority to essentials, followed by complementaries, and desirables. The government should
refrain from performing all the functions that the private sector can perform. On the whole, shari’a is tilted
toward free trade).
32
Ibn Khaldun explained that tariffs, maks in Arabic, seem to come from custom or habit. Tariffs are
imposed by the state degree by degree to the extent that they exceed the just limit and they become a
custom. See Ibn Khaldun, Muqaddimat Ibn Khaldun [Introduction of Ibn Khaldun], Mahhada Lah¯a Wa-
Nashar Al-Fus¯ul Wa-Al-Faqar¯at Al-N¯aqisah Min Tab`¯atih¯a, Wa-Haqqaqah¯A Wa-Dabat
Kalim¯atah¯a Wa-Sharahah¯a Wa-`Allaqa `Alayh¯a Wa-`Amilafah¯arisah¯A `Al¯i `Abd Al-W¯ahid
W¯af¯i , VOL. II, 668-669 (Lajnat al-Bay¯an al-`Arab¯i 1957). For an English translation in three volumes
of Ibn Khaldun’s Muqaddimah see Ibn Khaldun, The Muqaddimah: An Introduction to History LIV (Franz
Rosenthal trans., Princeton U. Press 1958) (Ibn Khaldun wrote his masterpiece, Muqaddimah, in 1377. Ibn
Khaldun’s Muqaddimah is the first volume of seven volumes which comprise his book “Kitab al-‘Ibar”. In
Kitab al-‘Ibar, Ibn Khaldun discussed events of the pre-Islamic world and Arab and Eastern Muslim
history. He also discussed the history of the Muslim West).
33
See Qur’an 2:43, 83, 110, 177, 277, 4:77, 9:5, 11, 18, 60, 71, 73:20, and 98:5.
34
Id. 2:263. 264, 271, 280, and 57:18.
35
Id. 2:267, 65:7, and 9:60. Those eligible for Sadaqa are the poor, the needy, workers of charity, newly
converts, slaves, debtors, warriors, and travelers. In some instances, Sadaqa is mandatory for example, in
the case of non-fulfillment of an oath. Id. 5:89.
36
Id. 8:41
17
religions other than Islam for their protection.
37
Beyond these four main religious taxes,
no other taxes formed any source of public revenue for the early Islamic state.
The question that comes to mind next is, if Zakat, Sadaqa, Ghanima, and Jizya were
the only taxes imposed in the early Islamic state, then how were the subsequent
expenditures of the Islamic state financed, especially after its enlargement? An Islamic
state has the right to impose other taxes according to Prophet Muhammad (s.a.w) Hadith
“in your money, there are taxes besides Zakat”.
38
However, a tax system ought to be
based on equity, efficiency, and simplicity.
39
The Prophet Muhammad (s.a.w) condemned the imposition of tariffs in the strongest
words. He said in a Hadith; “One who wrongfully takes an extra tax (Sahib Maks) will
not enter Paradise”.
40
The Hadith addresses customs duties specifically as well as Zakat
taken by the tax collector on above what is due. Moreover, the Hadith places a blanket
prohibition on tariffs regardless of the citizenship, or religion of a trader, or local content
of Muslim goods.
The Hadith of Prophet Muhammad (s.a.w) regarding tariffs not only set out the
doctrine, it was also practiced. Trade in Medina remained duty-free for nearly seventy
years until customs duties were levied during the reign of Caliph Mu’awiyah Bin Abi
Sufyan. Customs duties were abolished in the reign of Caliph Umar Abd Al-Aziz.
However, later in time, when it came to his knowledge that Muslim goods were subject to
duty in other states, Caliph Umar Abd Al-Aziz imposed ushur, 10 percent duty on their
imports.
41
Today, by way of analogy, if other countries impose tariffs on trade of
Muslims, Muslims may impose tariffs on them. The early Islamic state tariff policy was
one based on reciprocity.
B. Market Agents and Forces in Islam
After the expansion of the Islamic state beyond Medina, vast lands came into the
hands of Muslims. Prophet Muhammad (s.a.w) and his followers recognized individual
37
Id. 2:29.
38
Taxes are not the only source of revenue for the government. The government can impose user fees for
delivering its service, fines for violations, and charges for renting its buildings. Moreover, the government
can raise money through borrowing, domestically or internationally.
39
Toward the end of the Umayyad ruling of the Islamic world (661-750 C.E), rulers
overburdened Muslims through taxes. See S. M. Hasanuz Zaman, Economic Functions of
an Islamic State: The Early Islamic Experience 115 (2n ed., The Islamic Found. 1991).
40
See Ahmad Hasan, Sunan Abu Dawud, Vol. II, Chapter 1095, 830 (Sh. M. Ashraf 1984). Maks, an
Arabic word, is defined as toll or customs duty. See H.A.R.Gibb & J.H.Kramers, Concise Encyclopedia of
Islam 317 (4th ed., Brill Academic Publishers 2001).
41
See Al-Manhaj al-iqtis¯ad¯i f¯i al-Isl¯am : bayna al-fikr wa-al-tatb¯iq / al-Mu'tamar al-Ilm¯I al-Sanaw¯i
al-Th¯alith, al-Q¯ahirah 9-12 Ibr¯il 1983. [The Islamic Economic System between Theory and Practice].
436 (J¯ami`at al- Mans¯urah, Kull¯iyat al-Tij¯arah 1983). Verse 2:193 of the Qur’an authorizes retaliation,
in kind, if Muslims are subject to actions. Some old books treat the term Ushur the same as Maks, though,
Maks is more indicative as a customs duty. Ushur is defined as the tenth or tithe levied for public
assistance, frequently used in the sense of Zakat and Sadaqa. See Gibb & Kramers, supra note 40, at 611.
18
entrepreneurship, the basic premise of free trade. They encouraged the maximum utility
of barren land.
42
Islam also cherishes the inviolability of private property.
43
Private property is limited
only by the realization of others’ rights and public interest. Some argue, correctly, that
economics of Islam is based on mixed ownership.
44
Since Allah (s.w.t) owns all natural
resources, the Islamic state can exercise control over anfal such as land, water, and
mineral deposits.
45
Thus, Islamic economics embraces a dual ownership concept. In other
words, even though private ownership is guaranteed, the owner of such property acts as a
trustee or agent for Allah (s.w.t), the ultimate owner.
Interestingly, Islamic law lacks clear substantive rules on the protection of
intellectual property.
46
Perhaps because of the nature of ideas as incorporeal objects, there
42
Prophet Muhammad (s.a.w) is reported to have said, “Who revives dead land, it is for him”. See
ZAMAN, supra note 39, at 33. Caliph Umar Al-Khattab is quoted saying, “He who restores dead land,
owns it”. See also Heck, supra note 8, at 122. Prophet Muhammad (s.a.w) said, “There is none amongst the
Muslims who plants a tree or sows seeds and then a bird, or a person or an animal eats from it, but is
regarded as a charitable gift for him”. See Muhammad Muhsin Khan, Sah¯ih Al-Bukh¯ar¯i, vol. 3, 295 (4th
ed., D¯ar al-‘Arab¯iyat li-i- Tib¯a‘at wa al-Nashr wa al-Tawz¯ir 1985).
43
The Qur’an states, “And do not eat up Your property among yourselves For vanities, nor use it As bait
for the judges, With intent that ye may Eat up wrongfully and knowingly A little of (other) people’s
property”. See Qur’an 2:188. Prophet Muhammad (s.a.w) in his farewell pilgrimage said, “No property of a
Muslim is lawful to his brother except what he gives him from the goodness of his heart, so do not wrong
yourselves”. See AL-Ghazali, supra n. 22, at 457.
44
See Sohrab Behdad, Islamization of Economics in Iran Universities, 27 Intl. J. Middle East Stud. 193,
201 (1995). The Qur’an states, “Unto Allah belongeth whatsoever is in the heavens and whatsoever is in
the earth”. See also Qur’an 3:129.
45
See Behdad, at 202.
46
See Steven D. Jamar, The Protection of Intellectual Property Under Islamic Law, 21 Cap. U. L. Rev
1079, 1082, 1093 (1992) (protection of intellectual property in Islamic law is neither mandated nor
prohibited. There is lack of any express statements about it). See Amir H. Khoury, Ancient and Islamic
Sources of Intellectual Property Protection in the Middle East: A Focus on Trademarks, 43 IDEA 151,
187-202 (2003) (Islamic law does not directly address the issues pertaining to intellectual property rights.
The possible hurdles to intellectual property protection within Islamic law appear to emerge from a moral
and ethical basis in Islam. Intellectual property rights grant a monopolistic benefit to their owners
while the “Maslaha” (public good or interest) doctrine in Islam calls for distributive justice. The prevailing
Islamic approach to copyright has been that there should be no obstruction to the duplication of original
materials since the most widespread dissemination of knowledge is for the good of all). See also Ali Khan,
Islam as Intellectual Property "My Lord! Increase me in Knowledge," 31 Cumb. L. Rev. 631, 632-635,
649-650 (2001) (Islam itself as protected knowledge is a unique form of intellectual property. The Qur’an,
the Sunna, and the unique marks and symbols of faith such as mosque and the greeting of assalam-u-
alaikam (peace be upon you), together constitute the protected knowledge of Islam. However, there are
differences between the well-known kinds of secular intellectual property rights such as copyrights, patents,
and trademarks, and knowledge-based Islam. The former is the product of human intellect, innovation, and
effort. In contrast, Islamic assets cannot be created by human. Intellectual property is often commercial in
nature and protected for a short duration. Unlike intellectual property, the protected knowledge of Islam is
not for sale or commercial exploitation and it is timeless. The protected knowledge of Islam is universal
free for the benefit of all. Copies of the Qur’an may be freely made and published without any prior
permission and without paying royalties to any person, family, or nation. It has been copyrighted in
perpetuity as Allah’s authentic work. No individual, no family, and no nation can claim proprietorship of
these assets. In fact, no concept of ownership applies to the knowledge-based assets of Islam, as it does to
intellectual property).
19
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