Free Trade Agreement (FTA) is a pact or agreement between countries that facilitates free trade among them. This agreement eliminates or reduces trade barriers such as tariffs, quotas, and other trade restrictions between participating countries.
The primary purpose of an FTA is to increase trade between countries by creating a level playing field that encourages economic growth and development. The agreement`s implementation brings about a number of benefits for participating countries, including increased economic growth, job creation, and improved access to commodities and services.
Free trade agreements can be bilateral or multilateral, and the scope of the pact may vary depending on the economic interests of the participating countries. Some FTAs focus on particular industries like agriculture, textiles, or technology, while others may cover a broad range of sectors.
Under a free trade agreement, participating countries enjoy preferential treatment when it comes to trade activities. This means that their products and services are given favorable tariff rates and other benefits over those of non-participating countries.
Perhaps the most significant benefit of FTAs is the reduction in the cost of goods and services. With reduced tariffs, businesses can import and export commodities at a lower cost, which translates into lower prices for consumers. This reduction in cost creates a more competitive market, which drives businesses to improve and innovate to remain competitive.
Free trade agreements also help to promote economic growth for participating countries by providing new market opportunities. Businesses can expand their markets, access new customers, and increase their revenue streams. In addition, free trade agreements can help to attract foreign investment, which can lead to job creation and increased economic activity.
Despite the benefits of free trade agreements, there are concerns over the impact they can have on specific industries and the workforce. Industries that are not competitive with other countries may suffer, and workers in these industries may experience job losses.
In conclusion, free trade agreements are important for promoting global trade and economic growth. With reduced trade barriers, businesses can expand their markets, access new customers, and increase their revenue streams. However, it is important to address the concerns of industries and workers that may be negatively impacted by free trade agreements while encouraging a fair playing field for all parties involved.