
GUEST COLUMN:
Dr Edward Thomas Jones,
Senior Lecturer in Economics, Bangor Business School,
Bangor University

Trade deals have long shaped the course of global relations and economic development – from ancient exchanges in Mesopotamia to today’s complex agreements driven as much by politics as by economics.
From ancient barter to modern agreements
The first known trade deal dates back over thousands of years ago to ancient Mesopotamia (what is now modern-day Iraq). This wasn’t a single “trade deal” like we know today, but rather a complex and evolving network of trading relationships between city-states and neighbouring regions. The fertile land of Mesopotamia allowed it to thrive in agriculture production, but it lacked natural resources (such as timber) and needed to trade with other to acquire these.
The Cobden-Chevalier Treaty of 1860 between the UK and France is considered to be the first modern trade deal, in that applied free trade principles and had a most-favoured-nation clause (a common feature of trade agreements today). This trade deal reduced or, in some cases, completely eliminated tariffs on many goods between the UK and France and triggered a wave of bilateral trade treaties across Europe.
Although the basic idea of trade deals is easy to grasp, the reality and specifics details can be quite complicated. Trade deals work to decrease or get rid of trade barriers, for example tariffs and restrictions, between participating countries to promote international trade. This includes many types of agreements, including bilateral deals between two countries and multilateral agreements involving many countries.
The Brexit promise (or lie)
Brexiteers argued that, after the UK left the EU, the country's newly acquired power to sign global trade deals would not only compensate for any loss of access to the single market, but also free the UK to strike trade deals with high-growth economies in Asia and the US. In preparation for the opportunities post-EU membership, the UK established a new Department for International Trade and agreed a sealed a number of free trade agreements after leaving the EU. On December 15, 2024, the UK completed new trade agreements with Australia and New Zealand and became a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Most UK free trade deals agreed were just continuations that simply replicate prior agreements. This minimised disruption by maintaining the current state, but it didn’t open up new markets or economic opportunities. It was never going to be possible for these free trade agreements to compensate for the significant costs of leaving the EU single market. Despite their helpfulness, free trade agreements’ impact on the economy is small.
May Milestones
May was a busy month for the UK in terms of trade deals. The month began with the UK Government announcing it had signed a trade deal with India after three years of negotiations. This agreement will reduce tariffs on a wide range of British products sold in the US, including whisky, food, and electrical goods among others. While the deal's implementation is a year away, it's predicted to increase the UK's economy by only 0.2%.
A US-UK trade deal was finalized a few days later, marking the first such agreement since President Trump initiated a trade war in April. While Donald Trump does not have the authority to sign the type of free-trade agreement India and the UK, the deal is projected to lessen the negative impact on the car sector and remove trade barriers on beef, steel, and aluminium. Although both leaders praised the deal, the UK faces tougher trading relationship with the US than before Donald Trump introduced sweeping global tariffs on Liberation Day.
In May, and nine years after the Brexit referendum, the UK and the EU struck a deal that covers fishing, trade, defence, and energy. In light of the Russian invasion of Ukraine and Donald Trump's negative views on NATO, the central focus of this agreement is a security and defence pact formalizing cooperation in military exercises and deployment, cyber and space security, infrastructure protection, and combating hybrid warfare. This trade deal, while not economically impactful, represents a shared desire for increased cooperation.
The political shift in modern trade deals
It’s currently unclear what these trade deals will mean for the Welsh economy. However, it’s unclear if the main purpose of these trade deals was to improve the economies of those countries who signed the agreements.
Unlike historical trade deals, governments are now using economic and financial policies to play power games. It was generally assumed throughout most of the 20th century that rational economic self-interest ruled the roost and not grubby politics. For this period, politics seemed to be derived from economics, not the other way around.
No longer. The trade war unleashed by US President Donald Trump has shocked many, since it seems so irrational by the standards of neoliberal economics. But rational or not, it reflects a shift to a world where economics has taken second place to political games, not just in America, but in many other places too.