Fta

A 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.

It can be considered the second stage of economic integration

Countries choose this kind of economic integration form, if their economical structures are complementary. If they are competitive, they will choose customs union.

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. 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. 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 Ð'-- sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs.

The free trade area is a result of a free trade agreement (a form of trade pact) between two or more countries. Free trade areas and agreements (FTAs) are cascadable to some degree Ð'-- 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) Ð'-- then the new FTA will consist of the old FTA plus the new country (or countries).

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

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