The signing of the US–EU framework trade agreement signals systemic changes sweeping across the global economy and trade flows.
We are witnessing, in real time, a transformation in the architecture of global trade. The world market no longer operates under rules shaped over decades within the WTO framework. Instead, new principles are coming to the fore — often driven by political and security considerations — based on bilateral agreements and alliances built on geopolitical proximity.
In this new paradigm, security, strategic compatibility and political trust often outweigh purely economic arguments. For an open economy like Ukraine’s, which is highly dependent on exports and imports (for instance, last year foreign trade turnover amounted to 60 per cent of GDP), this is not simply another test of adaptability; it is a matter of economic survival. Early adjustment confers competitive advantage. Remaining a passive observer during a period of geoeconomic upheaval risks the loss of export markets and a weaker outlook for national growth.
From relative stability to geoeconomic fragmentation
Over the past half-century, the pendulum of global trade has swung between openness and fragmentation. From 1975 to the early 1990s the international economy operated in a moderately fragmented but broadly stable environment, supported by a steadier geopolitical climate. After the collapse of the USSR and its satellite bloc, and with market reforms in Eastern Europe and Asia, globalisation accelerated. The free flow of capital, goods and technology became the hallmark of the era and fuelled world trade.
After the 2008 financial crisis, however, the global system began to tilt towards fragmentation. The shift became particularly evident from 2017, with the onset of the US–China trade war and reciprocal tariff increases. Despite a formal de-escalation, systemic risks were not resolved; longer-term tensions persisted.
The next blow came with COVID-19. The pandemic exposed the fragility of supply chains for goods, components and raw materials: lockdowns, production stoppages and logistics disruption quickly affected economies worldwide. The brief post-COVID revival in 2021–2022 did not alter the fundamentals. From early 2022, extensive sanctions against Russia, renewed US–China frictions and cooler relations even among allies — including the US and EU — deepened fragmentation and amplified its political and security dimensions.
A potential restriction by China on critical materials and rare earth metals would create difficulties for US defence, aerospace and machinery sectors and add inflationary pressure. Such risks inevitably inform trade policy and encourage reorientation towards partners with shared strategic interests.
The world is increasingly dividing into blocs, each with its own economic zones, standards, goals and values. Trade between blocs is restrained, while trade within blocs intensifies. This is more than regionalisation; it is a geopolitical reorientation of the global economic landscape.
Numbers don’t lie: deglobalisation in action
Statistics are less ambiguous than narratives. In 2008, world trade totalled US$16.1 trillion; by 2022 it was US$22.3 trillion. At first glance this is growth of 38 per cent. Adjusted for accumulated US dollar inflation of 36 per cent over the period, real growth is modest.
Growth rates underline the shift. In 2000–2008 (nine years), world trade volumes rose 2.5 times; in 2009–2022 (14 years) they increased only 1.38 times. The average annual growth rate fell from 16.7 per cent in 2000–2008 to 2.7 per cent in 2009–2022 — a sixfold slowdown.
Another indicator is exports as a share of global GDP: 25 per cent in 2008 versus 21 per cent in 2022, a fall of four percentage points (16 per cent in relative terms). Over the same period the world’s population expanded by more than a billion, which would ordinarily support production, consumption and trade. Even so, global trade growth remained limited; demographic expansion may account for much of the increase observed.
These data are a clear warning sign. The trade system established over decades has lost momentum. It no longer delivers the growth once regarded as standard, and a return to the earlier phase of globalisation appears unlikely.
The loss of multilateralism: bilateral alliances to the fore
Against this backdrop, bilateral agreements are gaining prominence. The US already has arrangements with the UK, Japan, the EU and others.
WTO mechanisms — notably binding dispute settlement — have lost effectiveness since the Appellate Body ceased functioning in 2019, while countries increasingly rely on non-tariff instruments (technical and environmental standards). Ukraine already encounters this in its EU trade, making standards harmonisation and product quality critical.
What should Ukraine do? Time is not on our side
Trade liberalisation is set to advance less through universal frameworks and more through regional and bilateral arrangements. This offers flexibility but demands strong negotiating capacity, swift decision-making and a systematic approach. It also requires structural transformation towards higher-technology production.
Global trade is likely to expand mainly within two broad blocs — “US+” and “China+” — with trade between them constrained. In such a world, Ukraine should deepen alliances with reliable partners now. The obvious direction is the EU, but Ukraine should also pursue deeper cooperation with Japan, Canada, Norway and others where strategic bilateral agreements are feasible.
Crucially, a return to previous patterns should not be expected. The WTO-centred system may recede. The emerging order relies on bespoke agreements, standards, flexible alliances and geopolitical calculation. Ukraine should not only adapt but anticipate and act early.
A central question remains: how can Ukraine become sufficiently competitive for other countries to seek trade agreements with it? Economic theory offers many routes to prosperity. Economic history highlights one recurring factor in successful transitions from developing to developed status: targeted national industrial protection. If Ukraine produces competitive technological goods at scale, they will find markets abroad — easing access to global markets in the process.
Author: Alona Lebedieva, owner of the Ukrainian diversified industrial and investment group Aurum Group