4.3.1 Political factors that affect global interactions

News article

‘Mother of all deals’: EU and India sign free trade agreement

Tariffs cut to zero for many industrial products, including iron and steel, plastics, chemicals and pharmaceuticals

The Guardian · 27 January 2026

Key terms

• Customs union
  • A trade bloc that removes internal tariffs and applies one common tariff to outsiders. This common external tariff is what separates a customs union from a simple free trade area, where each member still sets its own tariffs on outside goods. The EU Customs Union is the clearest example. Switzerland sits outside it, so Swiss goods still clear customs at the EU border.

• Economic migrant
  • A person who leaves their country of origin purely for economic reasons that are not in any way related to the refugee definition, in order to seek material improvements in their livelihood.

• Forced migrant
  • A person subject to a migratory movement in which an element of coercion exists, including threats to life and livelihood, whether arising from natural or man-made causes (e.g. movements of refugees and internally displaced persons as well as people displaced by natural or environmental disasters, chemical or nuclear disasters, famine or development projects).

• Free trade zone
  • A designated area within a country where goods can be imported, manufactured, and re-exported without the usual customs regulations, tariffs, and import/export duties, aimed at encouraging international trade and investment.

• Migration controls
  • Measures and policies implemented by a government to regulate the flow of people across its borders, including visa requirements, border security, immigration quotas, and procedures for asylum and deportation, aimed at managing and monitoring immigration and emigration.

• Multi-governmental organisation
  • An entity formed by multiple sovereign states that collaborate on common interests, policy-making, and governance, often aiming to address global issues and facilitate international cooperation.

• Quotas
  • A quota is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period. Countries use quotas in international trade to help regulate the volume of trade between them and other countries. Countries sometimes impose quotas on specific products to reduce imports and increase domestic production.

• Rules of origin
  • The tests that decide which country a good counts as coming from for trade purposes. They matter because trade bloc benefits only apply to goods that qualify. Under USMCA a product must contain enough North American content, or undergo a set process, before it can cross the border duty free, which is why firms work hard to prove compliance.

• Special economic zone
  • An area inside a country with its own trade and tax rules to attract investment. Special economic zones are one type of free trade zone, usually offering lower duties, tax breaks and lighter regulation than the rest of the country. China created its first zones in 1980, with Shenzhen the best known.

• Tariffs
  • A tariff is a tax imposed by a government of a country or of a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard domestic industry. Tariffs are among the most widely used instruments of protectionism, along with import and export quotas.

• Trade bloc
  • A type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

• Trade war
  • A trade war happens when one country retaliates against another by raising import tariffs or placing other restrictions on the other country's imports.

• WTO
  • The World Trade Organization, which sets and enforces the rules of global trade. It had 166 members in 2026 and is based in Geneva. It works through agreed limits on tariffs and a system for settling disputes between members. China joined in 2001, after which its share of world trade rose sharply.