Free Trade Area

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Definition of 'Free Trade Area'

A free trade area (FTA) is a group of countries that have agreed to remove all or most tariffs and other trade barriers between them. This allows goods and services to flow more freely between the member countries, which can boost economic growth and create jobs.

There are over 200 free trade agreements in force around the world, covering more than 90% of global trade. Some of the largest FTAs include the North American Free Trade Agreement (NAFTA), the European Union (EU), and the Asia-Pacific Economic Cooperation (APEC) forum.

Free trade agreements can have a number of benefits, including:

* Increased trade and investment: By removing trade barriers, FTAs make it easier for businesses to trade with each other. This can lead to increased exports and imports, which can boost economic growth.
* Lower prices: Free trade can lead to lower prices for goods and services. This is because businesses can compete more easily across borders, which can drive down prices.
* More jobs: Free trade can create jobs by increasing investment and trade. This is because businesses need workers to produce goods and services for export.
* Increased competition: Free trade can increase competition between businesses. This can lead to better products and services for consumers.

However, there are also some potential drawbacks to free trade agreements. These include:

* Job losses: Free trade can lead to job losses in some industries. This is because businesses may move their operations to countries with lower wages and fewer regulations.
* Increased environmental damage: Free trade can lead to increased environmental damage. This is because businesses may produce goods and services in countries with weaker environmental regulations.
* Loss of national sovereignty: Free trade agreements can give foreign countries more influence over a country's economy. This can lead to a loss of national sovereignty.

Overall, free trade agreements can have a number of benefits and drawbacks. The specific effects of an FTA will depend on the specific agreement and the countries involved.

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