What is a free trade agreement (FTA)?

A free trade agreement (FTA) is indeed a treaty that reduces or eliminates trade barriers to facilitate trade between countries. This type of agreement aims to promote international trade by lowering or removing tariffs and other regulatory obstacles that can inhibit commerce across borders. By fostering a more open trade environment, FTAs enhance competitiveness, encourage investment, and can lead to lower prices for consumers.

FTAs can cover various aspects, including tariffs, import quotas, and export restrictions, allowing for a smoother flow of goods and services. The ultimate goal is to create a more efficient market where businesses can operate more freely, thus benefiting both consumers and producers in the participating countries. This concept is foundational in international business, as it underscores the importance of collaboration among nations to boost economic growth and integration.