In EP1, the Trade Federation invades Naboo with a large force, but you may wonder why the Senate was unable to stop it and expanded its army so much.
At the time, the Trade Federation used its trade privileges to monopolize profits in the free trade zone. For the planets of the Outer Rim, the Trade Federation was the only means of trade and commerce, so they were reluctant to pay the high prices and rely on the Trade Federation. The Outer Rim systems should have taken their grievances to the Senate, but they did not have a seat in Parliament, and instead the Trade Federation claimed trade privileges.
The organizations that rebelled against it became pirates and began to interfere with the work of the Trade Federation. The Trade Federation asked the Chancellor to intervene with the Republican Army, but Valorum was reluctant to use it. In a gradual escalation, Valorum consulted his friend Palpatine in secret. Palpatine proposes to impose tariffs on the free trade zone and instead allow the Trade Federation to arm for defense. This would curb the greedy Trade Federation through taxation and put an end to piracy without the intervention of the Republican army.
However, it's not that easy.
The Trade Federation has added the imposed tariffs to the fees from the planet.
Foreseeing this, Palpatine allows the Chancellor to say that the Republic will pay the collected tariffs to the Outer Rim system as an infrastructure support payment.
This loophole in the law allows the Trade Federation to expand without the use of military equipment. The more active and smooth the trade and commerce in the core and the outer rim, the stronger the military will be. Palpatine, who advised the Chancellor, as Sidious, had ordered the Trade Federation to keep its armaments hidden. Even if the military mightiness was exposed to the Senate, the Senate could not criticize the Trade Federation because it was the Senate itself that created the loophole in the law.
