The world must not forget the power of free trade

The more freely a nation trades with the world the greater the impact. This fundamental truth has been forgotten in some quarters, but not in the UAE, says minister for foreign trade Dr Thani Al Zeyoudi

Trade drives growth. This ought to be an uncontroversial statement, supported as it is by the cumulative evidence of the last 75 years. But in the shadow of tariffs and trade wars, with trade deals subject to renegotiation or, at worst, revocation, it is perhaps necessary to remake the case. 

According to the World Bank, developing countries increased their share of global exports from 16 per cent to 30 per cent between 1990 to 2017. In the same period, the global poverty rate fell from 36 per cent to nine per cent. It is unarguable that the more freely and equitably a nation is able to participate in the multilateral trading system, the greater impact on GDP, economic expansion and job creation. 

What was once the consensus, however, is slowly being unwound, replaced by a conviction in certain quarters that international commerce is a battleground of winners and losers. Since the pandemic and the associated disruption to supply chains, many nations have redrawn their trade networks in favour of reshoring, nearshoring and a reliance on domestic production of key materials, whether metals or medicines. We have also seen the reintroduction of export controls and non-tariff trade barriers, particularly in relation to the safety and sanitary standards required for food and medical imports. 

What was once the consensus, however, is slowly being unwound, replaced by a conviction in certain quarters that international commerce is a battleground of winners and losers

These trends have the potential to severely weaken the global economy. According to the International Monetary Fund (IMF), trade fragmentation could reduce global economic output by as much as seven per cent over the long term – which equates to a loss of $7.4 trillion. The World Bank says protectionism will result in global income losses of $211bn, pushing tens of millions of people into poverty by 2030. Trade restrictions are bad for everybody.

Thankfully, the worst-case scenarios remain on the other side of the horizon. The world is not moving away from trade, and the fundamental need for cross-border exchange, investment and collaboration continues to propel global trade volumes and values higher. In 2024, international trade climbed to an all-time high of $33 trillion, with services fuelling much of its growth. 

What is needed now is a recognition that trade alliances are evolving. With the decline of the post Bretton-Woods trading system, the institutions that govern global trade must keep pace or be sidestepped – possibly permanently. As we saw first-hand at the 13th Ministerial Conference of the World Trade Organization (WTO) in Abu Dhabi in 2024, unanimity on trade rules is hard to find – and enforcement of those rules even harder. In their place, we are seeing a new form of trade agreement, often regional in nature and built around mutual economic interests, supply-chain efficiencies, and investment potential. They emphasize agility and flexibility that can drive immediate benefits for the private sector.

The Regional Comprehensive Economic Partnership (RCEP) between 15 Asia-Pacific countries – Australia, China, Japan and South Korea among them – is perhaps the most conspicuous example. Effective from January 2022, it is now the world’s largest free-trade area. India, meanwhile, has signed four major free-trade deals in as many years, while the European Union and the Mercosur countries of Argentina, Brazil, Paraguay and Uruguay have finalized a long-awaited deal, marking a significant milestone in transcontinental trade.

The United Arab Emirates has actively embraced this evolution. In recent years, we have advanced a bold trade agenda centered on building dynamic, high-impact partnerships with key global markets. Our Comprehensive Economic Partnership Agreement program has now secured tariff-free, frictionless trade with the likes of India, Turkey and Indonesia, with a total of 24 deals concluded with nations in Asia-Pacific, Europe, Africa and South America. Similarly, our membership in BRICS reflects our commitment to expanding economic engagement with both emerging and established markets. 

Pragmatism and opportunity

The UAE’s approach to trade deals is guided by pragmatism and economic opportunity. Earlier this month, we signed a Comprehensive Economic Partnership Agreement with Ukraine. It is a demonstration of the value we place on our friendship with Kyiv and our belief in the country’s future – a vision determined by the possibilities of tomorrow rather than the politics of today. For us and our partners, reaching out continues to work better than pulling back.

Our trade results bear this out. The UAE’s non-oil foreign trade in goods reached a record $816bn in 2024, the fourth consecutive year in which we set a new trade milestone. This was also a year-on-year increase of 14.6 per cent – or more than seven times the global trade-growth average. 

These new trade alignments are not so much a counter to isolationism as it is a practical alternative to the micro-gains of the multilateral trading system. Let’s call it poly-lateralism: a policy that prioritizes finding common ground with growth-focused nations and moving fast. As nations leverage trade to pursue their food security and energy transition agendas, they will favor trade networks that offer collaboration, connectivity and, above all, consistency. 

The UAE firmly believes that open, rules-based trade is fundamental to global prosperity. Trade deals are not a matter of taking sides but choosing the right partners, on the right terms, that satisfy each other’s economic goals. The UAE will continue to work with nations across the world to build an economic environment that is dynamic, inclusive, and positioned for long-term growth. 

Trade patterns are always going to shift, but we must ensure that global commerce isn’t a tool of division but a driver of progress for us all.

Dr Thani Al Zeyoudi is UAE minister of state for foreign trade