Trade Insight: Do You Know the Difference Between Types of Agreements?
- GMCCTradeteam
- Jul 28
- 2 min read
In the world of international trade, terms like Free Trade Agreement, Trade Deal, and Bilateral Agreement are often used interchangeably. But for UK exporters, understanding the differences is more than just semantics it can directly impact your market access, pricing, and long-term strategy.Â
Free Trade AgreementsÂ
A Free Trade Agreement (FTA) is a formal arrangement between two or more countries that reduces or eliminates barriers to trade, such as tariffs or quotas. These agreements are typically broad in scope and legally binding, designed to promote open trade by making it easier and more cost-effective for countries to do business with one another.Â
FTAs often include provisions on services, intellectual property, labour rights, and environmental standards, going beyond just trade in goods.Â
Trade DealsÂ
The term "trade deal" is more informal and broadly refers to any agreement, temporary or long-term that influences trade between nations. This could be a short-term arrangement on specific goods, temporary tariff reductions, or sector-specific cooperation. While not always legally binding or comprehensive, these deals are often politically driven and focused on strategic or economic priorities.Â
Bilateral AgreementsÂ
A bilateral agreement involves two countries and can cover a wide range of topics beyond trade, including investment, immigration, and mutual standards. When focused on trade, a bilateral agreement can also be structured as an FTA. These agreements are tailored to the needs and interests of the two countries involved, often forming part of a post-Brexit UK trade strategy.Â
Agreement Type | Scope | Legally Binding | Number of Countries | Typical Use |
Free Trade Agreement | Comprehensive (goods, services, IP, etc.) | Yes | Two or more | Removing trade barriers and expanding market access |
Trade Deal | Varies (can be temporary or sector-specific) | Not always | Two or more | Addressing short-term or political trade objectives |
Bilateral Agreement | Varies; can include trade and other areas | Yes (usually) | Two | Strengthening cooperation between two countries |
Â