OK, this is where we get the "nothing not explicitly allowed is disallowed" crowd jumping in and saying it isn't, but, as far as I'm concerned, and as far as I can recall, there's nothing in the rules to say you can't trade to form alliances, so yes, you can.
It's something I would seek agreement on with those playing the game at the time, though.
I agree with Scott. Obviously I can't speak for the designers but I would suggest that Terror Bull seem to belong to the 'everything not disallowed by the rules is allowed' crowd rather than the other way round. (Take a look at their game Crunch to see how far they push this). It does seem like a good idea to establish a consensus on this before you start, although probably more in keeping with the game would be to establish a consensus and then break it!