Why do countries trade?

This blog is part of our ‘Beginner’s Guide’ series; insightful, accessible explainers of all things trade. The author of this instalment is Pinar Gunes, an Assistant Professor in Trade and CITP researcher at the University of Sussex. In this piece, Pinar delves into how trade shapes economic growth and explains why understanding trade matters more than ever. If you wish to deepen your knowledge on trade policy, check out the CITP's Online Diploma in International Trade Policy.  International trade is often reduced to headlines about tariffs, deficits, and trade wars. It is frequently discussed as a political choice—something governments decide to allow or restrict. Yet beneath this political noise lies a fundamental force that has shaped the world for centuries—the desire to exchange goods and services with others for mutual benefit. Long before money, modern borders, or governments existed, people exchanged goods through barter: trading what they had for what they needed. Because no individual or community could produce everything on their own, exchange became a practical way to survive and prosper. Today, this exchange takes place across national borders on an unprecedented scale, creating a deeply interconnected global economy. Countries trade because they are different The most straightforward reason [...]

By |2026-04-08T08:58:24+01:008 April 2026|Begginer's Guides, Blog|0 Comments
Read More

All roads lead to Geneva: Insights from MC14

From 26 March to the early hours of 30 March 2026, ministers from WTO Members met in Yaoundé, Cameroon, for the 14th WTO Ministerial Conference. The goal was to review the past two years of negotiations and deliver outcomes on the MC14 agenda. Coined the Reform Ministerial, most discussions focused on the WTO's future amidst existing challenges and opportunities. And because it was held in an African country, the MC14 strongly emphasised development-related issues. However, the current geopolitical context affected expectations for MC14, resulting in broad and vague ministerial documents and declarations. WTO negotiations depend on what WTO Members can agree on by consensus. Conflicting interests and diverging interpretations of even cornerstone rules, such as the most-favoured-nation (MFN) principle, made significant progress difficult. MC 14 outcomes MC14 outcomes were reached in advance and only formalised in Yaoundé. WTO Members agreed to continue negotiating fisheries subsidies, with a goal to achieve a comprehensive Agreement on Fisheries Subsidies (AFS2) during MC15. Since AFS1 entered into force on 15 September 2025, Members have until September 2029 to adopt AFS2. Failure to do so will result in the current agreement being terminated (unless the General Council decides otherwise). Ministers also adopted two decisions on [...]

By |2026-03-31T14:30:54+01:0031 March 2026|Blog, International Trade|1 Comment
Read More

The UK-US ‘geopolitical’ deal: A dangerous precedent for the UK and the world

We are living in a geopolitical world. While states may cloak their actions in legal justifications or economic reasoning, trade has become a tool to assert power, control narratives, and forge alliances. Trade deals are being designed to reduce vulnerabilities, not barriers. The recently announced US-UK deal is not a traditional trade agreement but a ‘geopolitical’ deal strongly reflecting the US’s geopolitical rivalry against China. Lacking the legally binding nature of international agreements, the deal sidesteps legal frameworks and instead stakes its importance on strategic alignment. As such, it signals a broader shift in how the US, which has its global leadership threatened by the rise of China as a superpower, now uses trade policy: not as a matter of market efficiency or legal commitments, but as an instrument of geopolitical influence and national security. Furthermore, the deal clearly shows the second Trump administration’s strong intention to force trade partners to collude with the US to squeeze China from global supply chains. Securitising supply chains At face value, the deal includes a few economic concessions, conditional on fulfilling security-related requirements. For example, the US has agreed to reduce tariffs on British steel, aluminium, and automobiles. In return, the UK will [...]

By , |2025-05-14T09:49:44+01:0014 May 2025|Blog, International Trade, UK - Non EU|0 Comments
Read More

Stroking a bear to get half a sandwich

The UK and the US announced the first bilateral post-Reciprocal Tariffs deal on 8 May, named the 'U.S.-UK Economic Prosperity Deal' (henceforth the US-UK EPD). The document published yesterday draws out the contours of this EPD, alongside some concrete initial proposals for reciprocal preferential market access for selected goods. Notwithstanding the negotiations starting immediately, this arrangement can be called off at any time, simply by the two parties giving each other written notice. Besides its symbolic and diplomatic relevance, what is the value of this emerging deal for the UK? This is not a Free Trade Agreement. At first glance, it looks like a quid-pro-quo “mini-deal” of limited economic relevance that the US strong-armed the UK into accepting under the threat of tariffs. The UK is getting some respite from Trump’s tariffs in the (important) car and the (strategic) steel and aluminium sectors, in exchange for lowering tariffs on some agricultural products such as ethanol and beef, the latter on a reciprocal basis. But a closer reading of the ‘General Terms document’ suggests that it is more than this, and a lot worse. First, as stated on page 1 of the text, the arrangement that the US and the UK [...]

By , , , , |2025-05-09T18:57:18+01:009 May 2025|Blog, International Trade|0 Comments
Read More

The rise of China in the US backyard amid Trump Tariffs

The uncertainty caused by the trade policy actions undertaken by the Trump administration poses a serious challenge to the world, but particularly to regions that historically relied on the United States both as a commercial and political ally, such as Latin America. The Trump 2.0 regime has levied a baseline 10% tariff on most Latin American countries[1], including those that have a Free Trade Agreement (FTA) with the US, such as Chile (2003), Peru (2009), Colombia (2012), and Panama (2012). The uncertainty surrounding the permanence of such measure (and the potential for further protectionist actions) will encourage these countries to seek and consolidate more secure trade links with like-minded partners, with more predictable trade policies. Such a shift has already been happening. The US has gradually been losing its relevance as the main trading partner for some Latin American countries, particularly those in the south, with one key actor playing a central part in this story: China. China’s penetration in the South American market over this century has been taking place at different levels. Regarding trade, China has Free Trade Agreements in force with Pacific countries like Chile (2006), Peru (2010) and more recently with Ecuador (May 2024). Trade and [...]

By , |2025-05-02T15:32:44+01:002 May 2025|Blog, International Trade|0 Comments
Read More

Blinded by the light: The trouble with today’s trade policy

Trade policy is more difficult today that it was three months ago, and significantly more so than five years ago. The former is due to the actions of the new US administration, but the latter is a more complicated story that has dramatically changed trade policy across the world. Over the last 30 years or so trade policymakers have largely focused on efficiency gains - more open markets leading to better productivity and economic growth. This was more or less taken for granted, backed by considerable evidence. The distributional implications and broader concerns beyond economic growth have been seen as beyond the purview of trade policy, perhaps too easily. Once again, trade policy makers and analysts either took for granted that these issues were not so important in the trade context, or if they were, they would be dealt with by other areas of government policy. However, in today’s world even efficiency and equity considerations fail to adequately capture the concerns of trade policy. Unforeseen events – Covid-19, the Russian invasion of Ukraine, extreme weather, and semi foreseen events such as Trump tariffs – have underpinned increasing concerns about economic security, supply chain resilience and national security, and the threats [...]

By |2025-05-02T11:25:34+01:004 April 2025|Blog, International Trade|0 Comments
Read More

Why discussion of Trade Policy matters in the General Election

30 May 2024 - Ingo Borchert is Deputy Director of the UKTPO, a Member of the Leadership Group of the Centre for Inclusive Trade Policy (CITP) and a Reader in Economics at the University of Sussex. Michael Gasiorek is Co-Director of the UKTPO, Co-Director of the CITP and Professor of Economics at the University of Sussex. Emily Lydgate is Co-Director of the UKTPO and Professor of Environmental Law at the University of Sussex. L. Alan Winters is Co-Director of the CITP and former Director of the UKTPO. A general election is underway, and the parties are making various promises and commitments to attract voters, and both the main parties – the Conservatives and Labour – are keen to persuade the country that they have a credible plan. Now it might just be that the authors of this piece are trade nerds, but one key aspect of economic policy has not yet been clearly articulated, or even mentioned – and that is international trade policy. In our view, this is a mistake. As a hugely successful open economy, international trade constitutes a significant share of economic activity, supports over 6 million jobs in the UK, spurs innovation, and enhances consumption choices. [...]

By , , , |2025-01-15T12:06:48+00:0030 May 2024|UK - Non EU, UK- EU|6 Comments
Read More

Do labour and environmental provisions in trade agreements lead to better social and environmental outcomes in practice?

13 December 2023 James Harrison is Professor in the School of Law at the University of Warwick. Emily Lydgate is Professor in Environmental Law at the University of Sussex and Deputy Director of the UK Trade Policy Observatory (UKTPO).  Ioannis Papadakis is a researcher at the Centre for Inclusive Trade Policy (CITP) and a Research Fellow in Economics. Sunayana Sasmal currently serves as a Research Fellow in International Trade Law at the UKTPO. Mattia di Ubaldo is Fellow of the UKTPO and Research Fellow in Economics of European Trade Policies. L. Alan Winters is Founding Director of the UKTPO,  Co-Director of the CITP and Professor of Economics at the University of Sussex. In answering this important question, different disciplinary approaches have emerged as have a range of different and sometimes contradictory findings. At the moment, scholars from the different disciplines are not talking to each other about the implications of this. The authors of this blog suggest it is vitally important that they begin to do so.   Trade agreements around the world increasingly include environmental and labour provisions. Their presence attests to policymakers’ recognition that trade agreements cannot simply focus on economic issues. They should also address environmental and social [...]

By , , , , |2025-01-15T12:35:09+00:0013 December 2023|UK - Non EU, UK- EU|3 Comments
Read More

Non-regression on environmental protection: Making sense of the REUL Bill

16 June 2023 Chloe Anthony, Doctoral Researcher at University of Sussex Law School and Legal Researcher for the UK Environmental Law Association’s Governance and Devolution Group. The Retained EU Law (Revocation and Reform) Bill is part of the Government’s ‘Brexit opportunities’ agenda. It is currently in its final stages in Parliament, going back and forth between the Houses, in a debate on the inclusion of clauses that aim to safeguard parliamentary scrutiny and prevent the lowering of environmental protections. It returns to the Commons on 20 June. […]

By |2025-01-29T15:26:15+00:0016 June 2023|Blog, UK- EU|1 Comment
Read More

Driving round the bend: Rules of origin and cars

8 June 2023 Michael Gasiorek is Director of the UK Trade Policy Observatory and Co-Director of the Centre for Inclusive Trade Policy. He is Professor of Economics at the University of Sussex Business School. Peter Holmes is a Fellow of the UK Trade Policy Observatory and Emeritus Reader in Economics at the University of Sussex Business School. Manuel Tong Koecklin is a Research Fellow in the Economics of Trade at the UK Trade Policy Observatory and University of Sussex Business School. Recently, there have been a series of reports in the media focussing on the challenges that electric vehicle (EV) manufacturers are likely to face, from the end of this year, in exporting electric vehicles tariff-free to the EU. The concern it because of the changes in the rules of origin (ROOs) requirements (for EVs and batteries) which will become more difficult from January 2024, and again from 2027 and 2028 onwards. […]

By , , |2025-01-29T15:27:05+00:008 June 2023|UK- EU|1 Comment
Read More

Our home

University of Sussex Logo

© 2024 UK Trade Policy Observatory

Site by: Phipps Design

Go to Top