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International Trade Series
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| International trade |
| History of international trade |
| Political views |
| Fair trade |
| Free trade |
| Protectionism
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| Economic integration |
| Preferential trading area |
| Free trade area |
| Customs union |
| Common market |
| Economic and monetary union |
| Other |
| Trade pact |
| Trade bloc |
| Trade creation |
| Trade diversion |
- This is article is on free international trade. International trade is exchange of Capital, Goods, and Services across International borders or Territories. The history of international trade chronicles notable events that have affected the Trade between various countries Fair trade is an organized Social movement and market-based approach to empowering developing country producers and promoting sustainability Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions For the protectionist Australian political party from the 1880s to 1909 see Protectionist Party Economic integration is a term used to describe how different aspects between economies are integrated A Preferential Trade Area is a Trading bloc which gives preferential access to certain products from the participating countries A customs union is a Free trade area with a Common external tariff. An economic and monetary union is a Single market with a common currency A trade pact is a wide ranging Tax tariff and trade pact that often includes Investment guarantees A trade bloc is a large Free trade area formed by one or more Tax tariff and trade agreements Trade creation is an Economic term related to International economics in which Trade is created by the formation of a Customs union. Trade diversion is an Economic term related to International economics in which Trade is diverted from a more efficient exporter towards a less efficient This is list of Free trade agreements and Free trade areas between one or more countries and/or Trade blocs For a list of blocs see Trade bloc. For information on special economic zones within countries, see Free trade zone. A free trade zone ( FTZ) or export processing zone ( EPZ) is one or more special areas of a country where some normal Trade barriers such as
Free trade area is a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods between them. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary A quota share is a specified number or percentage of the allotment as a whole ( Quota) that is prescribed to each individual entity (see Non-tariff barriers to trade
It can be considered the second stage of economic integration. Economic integration is a term used to describe how different aspects between economies are integrated
Countries choose this kind of economic integration form if their economical structures are complementary. If they are competitive, they will choose customs union. A customs union is a Free trade area with a Common external tariff.
Unlike a customs union, members of a free trade area do not have the same policies with respect to non-members, meaning different quotas and customs. Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions When a group of countries form a Customs union they must introduce a common external Tariff. Customs is an Authority or agency in a Country responsible for collecting and safeguarding customs duties and for controlling the flow of goods To avoid evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Re-exportation is when a member of a Customs union charges lower Tariffs to external nations to win trade and then re-exports the same product within the customs Rules of origin are used to determine the Country of origin of a product for purposes of International trade. Materials are physical Substances used as inputs to production or Manufacturing. The economic value of a good or service has puzzled economists since the beginning of the discipline Goods that don't cover these minimum requirements are not entitled for the special treatment envisioned in the free trade area provisions.
Cumulation is the relationship between different FTAs regarding the rules of origin — sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs. A cumulene is a Chemical compound with three or more cumulative (consecutive double bonds, for example 123-butatriene (which is also just called cumulene
A free trade area is a result of a free trade agreement (a form of trade pact) between two or more countries. A trade pact is a wide ranging Tax tariff and trade pact that often includes Investment guarantees Free trade areas and agreements (FTAs) are cascadable to some degree — if some countries sign agreement to form free trade area and choose to negotiate together (either as a trade bloc or as a forum of individual members of their FTA) another free trade agreement with some external country (or countries) — then the new FTA will consist of the old FTA plus the new country (or countries). A trade bloc is a large Free trade area formed by one or more Tax tariff and trade agreements
Within an industrialized country there are usually few if any significant barriers to the easy exchange of goods and services between parts of that country. For example, there are usually no trade tariffs or import quotas; there are usually no delays as goods pass from one part of the country to another (other than those that distance imposes); there are usually no differences of taxation and regulation. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary Between countries, on the other hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be import duties of one kind or another (as goods enter a country) and the levels of sales tax and regulation often vary by country.
The aim of a free trade area is to so reduce barriers to easy exchange that trade can grow as a result of specialisation, division of labour, and most importantly via (the theory and practice of) comparative advantage. In international trade the principle of comparative advantage refers to the fact that although one country may have an absolute disadvantage with another value can be created for both The theory of comparative advantage argues that in an unrestricted marketplace (in equilibrium) each source of production will tend to specialize in that activity where it has comparative (rather than absolute) advantage. The theory argues that the net result will be an increase in income and ultimately wealth and well-being for everyone in the free trade area. However the theory refers only to aggregate wealth and says nothing about the distribution of wealth. In fact there may be significant losers, in particular among the recently protected industries with a comparative disadvantage. The proponent of free trade can, however, retort that the gains of the gainers exceed the losses of the losers.
See also
- Trade
- Free trade
- List of free trade agreements
- European Free Trade Area (EU, EFTA, CEFTA)
- Transatlantic Free Trade Area (TAFTA)
- List of trade blocs
- List of international trade topics
- Free trade zone
Dictionary
free trade area
-noun
- an international region in which obstacles to unrestricted trade have been reduced to a minimum
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