Definition
- Free trade area
- A free trade area is an agreement in which members allow each other's imports without tariffs or quotas, while each sets its own tariffs on outsiders.
Example
Can you think of an example of free trade area?
If the UK and a partner form a free trade area, a British car enters the partner's market tariff-free, but each country still sets its own tariff on cars from China.
Test yourself
Can you name the four stages of economic integration?