A free trade agreement (FTA) is a treaty between two or more countries that aims to increase trade and investment activities. FTAs eliminate or reduce trade barriers such as tariffs, quotas, and non-tariff barriers to allow goods and services to flow freely between participating countries.
If you`re involved in international trade, it`s essential to understand the various FTAs that exist and their provisions. Below is a cheat sheet to help you navigate the complex world of free trade agreements.
North American Free Trade Agreement (NAFTA)
NAFTA was established in 1994 between Canada, Mexico, and the United States. It aims to eliminate barriers to trade and investment between the participating countries. NAFTA eliminates tariffs on most goods traded between the countries and provides a framework for resolving disputes.
Trans-Pacific Partnership (TPP)
The TPP was a proposed trade agreement between 12 Pacific Rim countries, including the United States, Canada, and Japan. The agreement aimed to eliminate trade barriers and promote economic integration. However, the United States withdrew from the agreement in 2017, leaving the remaining countries to go ahead with a revised version called the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
European Union (EU) Free Trade Agreements
The EU has a vast network of FTAs with countries worldwide, including South Korea, Mexico, and Japan. The agreements aim to reduce or eliminate tariffs on goods traded between the EU and the participating countries. The EU also has agreements with neighboring countries such as Norway and Switzerland, which are not part of the EU but have close economic ties.
Mercosur is a trade bloc comprising Brazil, Argentina, Paraguay, and Uruguay. The bloc aims to promote economic integration among the participating countries and eliminate barriers to trade and investment. A free trade agreement between Mercosur and the EU was signed in 2019, but it has yet to be ratified.
African Continental Free Trade Area (AfCFTA)
AfCFTA is a free trade agreement between 54 African countries that aims to create a single market and promote economic integration. The agreement was signed in 2018 and aims to eliminate tariffs on 90% of goods traded between the participating countries over time.
In conclusion, understanding free trade agreements is crucial for anyone involved in international trade. Each agreement has its provisions, and it`s vital to know how they affect the goods and services you trade. Keep this cheat sheet handy to navigate the complex world of free trade agreements.