A free trade area is a cooperative arrangement among two or more nations, pursuant to the General Agreement on Tariffs and Trade, whereby trade barriers are removed among the members The arrangement generally includes a customs union with a common external tariff, although there are exceptions in which members maintain individually separate tariff schedules for external countries Extensive economic analysis of WTO, NAFTA, and FTAA is available
Two or more countries that have eliminated tariff and most non-tariff barriers affecting trade among them, while each participating country applies its own independent schedule of tariffs to imports from non-member countries An example is the European Free Trade Association (EFTA) Free trade areas are governed by GATT Foreign trade zones or FTZs are the U S form of free trade areas Free trade zones (sometimes called "customs free" or "duty free" zones) is a generic term referring to special commercial and industrial areas where special customs procedures allow importation of foreign merchandise without the requirement that duties be paid immediately
A free trade area is a group of countries among which goods pass free of trade barriers but which does not adopt a common external tariff regime As such, the EC is a customs union, but NAFTA is a free-trade area because the external trade barriers of Canada, Mexico and the US were not harmonized