From the 12th to 18th Century, wool was the most important item in English trade. In the Middle Ages, the best English wool was the most prized in Europe and in later centuries, English cloth gained the same fame. In the 13th century, there was a rapid development of cloth manufacture in Flanders, and a resultant boom in English sheep farming.
The trade was organised by merchant guilds which operated an exclusive monopoly. By the 14th Century, wool merchants had become increasingly wealthy - some were so wealthy that they replaced Italian financiers who underwrote royal debts. In return, Edward III gave a small group of wool merchants an absolute monopoly on wool exports. However, this lasted only until 1350.
Over the next few years, a staple was organised. This was a fixed point through which all wool exports passed. From 1363, this was Calais - which proved to be very convenient for the Flemish markets. A Company of Merchants of the Staple was set up to manage the staple and pay taxes. It had a very large membership of approximately 300 to 400 merchants. The Company used its monopoly to transfer the heavy burden of royal taxation upon wool growers instead of the merchants themselves. This meant that the Company reduced the price paid to English wool growers.
An unexpected side effect was that the English cloth manufacturing industry was now able to purchase wool much more cheaply than its Flemish and Italian rivals. As such, English wool exports dropped from approximately 35000 sacks per year in the 14th century to 8000 sacks per year by the mid-15th Century. The export of cloth increased from approximately 9400 (1356-1360) to 56000 (1437 - 1440).
Sheep farming went through a decline until the mid-15th Century, but recovered during the reign of King Edward IV. It was not until much later, in the 17th Century, that English cloth was of such a quality as its Continental rivals.
"The English Medieval Wool and Cloth Trade" by Dr. Margaret Bonney
"Medieval Wool and Cloth Exports" - a database compiled by Dr. Margaret Bonney on England's Export Trade from 1275 - 1547 (website: http://esfdb.websites.bta.com/Database.aspx ).
The Wool Trade in English Medieval History - Lecture by Prof. Eileen Power (1941)