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Rules for world trade

An introduction to rules governing world trade, how free trade agreements work, and the difference between trading inside and outside the EU.

Trading within the EU is characterised by the free movement of goods and services.

Common market

The Member States of the EU, together with the EEA countries Norway, Iceland and Liechtenstein, have a common market, known as the internal market. Within this, goods manufactured and legally sold in one of the countries can normally be sold in the other countries without any additional requirements. In the internal market, the free movement of services also applies, which means that a company should be able to perform services in other Member States, and not only in the country in which it is domiciled.

The four freedoms of the internal market at the National Board of Trade Sweden (in Swedish)

In addition to the EU, the internal market also includes Norway, Iceland and Liechtenstein, with which the EU has free trade agreements. There are, however, some exceptions to the free movement of trade with these three countries.

Free movement for EEA countries at the National Board of Trade of Sweden (in Swedish)

Exceptions to free movement

In order to protect an important public interest, EU/EEA countries may require you as a business operator to meet certain national requirements to be able to sell your services or goods in that country. Some examples of important social interests are the protection of life and health, consumer protection and environmental protection.

If you want to find out what national rules apply for goods and services, you can contact the EU/EEA countries’ contact points.

EU countries’ contact points for goods at the European Commission
EU countries’ contact points for services at the European Commission

The World Trade Organization (WTO) deals with the global rules of trade between nations. The aim is to create a trading system that is transparent, predictable and has clear, non-discriminatory rules.

The WTO has three important main agreements: GATT for trade in goods, GATS for trade in services and TRIPS for the protection of intellectual property rights.

Ban on discrimination against other countries’ goods

The WTO rules on trade are based on two important principles. One is the principle of most favoured nation (MFN) and means that any benefit that one country gives to another country must also be given to other WTO countries. The second is the principle of national treatment which signify that imported goods have to be treated equally to domestic goods of the same kind.

There are exceptions to the MFN principle, for example, for free trade agreements and customs unions, but also for goods from developing countries.

Free trade agreements

The EU has free trade agreements with many countries. Countries conclude free trade agreements to facilitate trade with each other by increasing market access and transparency about the rules in force. This means, for example, that customs duties are reduced or removed, and that companies have increased access to public procurement markets.

In order to benefit from reduced customs duties, companies must be able to demonstrate that the product meets the requirements for origin as agreed by the parties in the agreement.

The EU’s trade agreement at the National Board of Trade of Sweden

International customs classification of goods

There is a harmonised system (HS) for the international customs classification of goods (the Harmonized Commodity Description and Coding System). This facilitates the customs classification of goods and has been developed by the World Customs Organization (WCO), which includes Sweden and other EU countries among more than 180 member countries.

See which countries are members of the WCO at wcoomd.org

The EU’s common customs tariff Taric provides information about which commodity codes are applicable to imports into and exports from the EU.

The EU’s common customs tariff at Swedish Customs