Free Trade Agreements

Definition

Free trade agreements are treaties between two or more countries that eliminate or reduce barriers to trade, such as tariffs and quotas. They aim to promote the exchange of goods and services without restrictions.

Related terms

Regional Integration: The process by which neighboring countries form economic alliances to enhance cooperation, reduce trade barriers, and promote regional development.

Comparative Advantage: The ability of a country or individual to produce goods or services at a lower opportunity cost than others.

Trade Blocs: Groups of countries that come together to promote trade among themselves by reducing barriers within the bloc while maintaining external trade policies. Examples include the European Union (EU) and the North American Free Trade Agreement (NAFTA).