Examine individual changes

'{{Unreferenced|date=July 2013}} {{about|free international trade|information on special economic zones within countries|Free-trade zone}}lol {{trading blocs}} A '''free-trade area''' is a [[trade bloc]] whose has member countries have signed a '''free-trade agreement''' ('''FTA'''), which eliminates [[tariff]]s, [[import quota]]s, and preferences on most (if not all) [[good (economics)|goods]] and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be considered an [[open border]]. It can be considered the second stage of [[economic integration]]. Countries choose this kind of economic integration if their economic structures are complementary. If their economic structures are competitive, it is likely there will be no incentive for a FTA, or only selected areas of goods and services will be covered to fulfill the [[Economics#Specialization|economic interests]] between the two [[signatory|signatories]] of FTA. ==Description== Unlike a [[customs union]] (the third stage of economic integration), members of a [[free-trade]] area do not have a [[common external tariff]], which means they have different quotas and [[customs (tax)|customs]], as well as other policies with respect to non-members. To avoid tariff 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 (economics)|value]] to the goods. Only goods that meet these minimum requirements are entitled to the special treatment envisioned by the free trade area provisions. Cumulation is the relationship between different FTAs regarding the rules of origin – sometimes different FTAs supplement each other, in other cases there is no cross-cumulation between the FTAs. A 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 – if some countries sign agreements to form a 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 another country (or countries) – 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 [[tariff]]s or import quotas; there are usually no delays as goods pass from one part of the country to another (other than those that distance imposes); there are usually no differences of taxation and regulation. Between countries, on the other hand, many of these barriers to the easy exchange of goods often do occur. It is commonplace for there to be import duties of one kind or another (as goods enter a country) and the levels of sales tax and regulation often vary by country. The aim of a free-trade area is to reduce barriers to exchange so that trade can grow as a result of specialisation, division of labour, and most importantly via [[comparative advantage]]. The theory of comparative advantage argues that in an unrestricted marketplace (in equilibrium) each source of production will tend to specialize in that activity where it has comparative (rather than absolute) advantage. The theory argues that the net result will be an increase in income and ultimately wealth and well-being for everyone in the free-trade area. But the theory refers only to aggregate wealth and says nothing about the distribution of wealth; in fact there may be significant losers, in particular among the recently protected industries with a comparative disadvantage. In principle, the overall gains from trade could be used to compensate for the effects of reduced trade barriers by appropriate inter-party transfers. ==Lists of free-trade areas== [[File:Economic integration stages (World).png|thumb|right|334px|Stages of [[economic integration]] around the World:<br>(each country colored according to the most advanced [[trade pact|agreement]] that it participates into.) {{legend|#008000|[[Economic and Monetary Union]] ([[CARICOM Single Market and Economy|CSME]]/[[Eastern Caribbean Currency Union|EC$]], [[Economic and Monetary Union of the European Union|EU]]/[[Eurozone|€]])}} {{legend|#00FF00|[[Economic union]] ([[CARICOM Single Market and Economy|CSME]], [[Single market of the European Union|EU]])}} {{legend|#00FFFF|[[Customs and Monetary Union]] ([[Economic and Monetary Community of Central Africa|CEMAC]]/[[Central African CFA franc|franc]], [[West African Economic and Monetary Union|UEMOA]]/[[West African CFA franc|franc]])}} {{legend|#804000|[[Common market]] ([[European Economic Area|EEA]], [[European Free Trade Association|EFTA]], [[Common Economic Space (CIS)|CES]])}} {{legend|#FF8040|[[Customs union]] ([[Andean Community|CAN]], [[Customs Union of Belarus, Kazakhstan and Russia|CUBKR]], [[East African Community|EAC]], [[European Union Customs Union|EUCU]], [[Southern Common Market|MERCOSUR]], [[Southern African Customs Union|SACU]])}} {{legend|#FF0000|[[List of multilateral free trade agreements|Multilateral Free Trade Area]] ([[ASEAN Free Trade Area|AFTA]], [[Central European Free Trade Agreement|CEFTA]], [[CISFTA]], [[Common Market for Eastern and Southern Africa|COMESA]], [[Greater Arab Free Trade Area|GAFTA]], [[Gulf Cooperation Council|GCC]], [[North American Free Trade Agreement|NAFTA]], [[South Asia Free Trade Agreement|SAFTA]], [[Central American Integration System|SICA]], [[Trans-Pacific Strategic Economic Partnership|TPSEP]])}}]] * [[List of bilateral free trade agreements]] * [[List of multilateral free trade agreements]] ''Every [[customs union]], trade [[common market]], [[economic union]], [[customs and monetary union]] and [[economic and monetary union]] also has a '''free-trade area'''''. <!-- listed are free-trade areas only - see respective articles for lists of preferential trade areas; common markets; customs unions; economic unions; customs and monetary unions; economic and monetary unions --> == Qualifying for a free-trade agreement == {{main|Rules of origin}} To determine eligibility for a free-trade agreement, importers must obtain product information from all the suppliers within the [[supply chain]]. An automated solution should be in place for an importer to solicit his/her suppliers. Once supplier documentation is received the importer must determine the eligibility of the product based on the many rules of origin surrounding the product's [[Harmonized System]] number. Each free trade agreement will qualify an importer's products in different ways, however the basis of the qualification surrounds the idea that the finished product must have a minimum percentage of local/regional content. Under the [[North American Free Trade Agreement]] (NAFTA), qualifying rules include De Minimis, Regional Value Content, and Tariff Shift. * De Minimis states that a finished good will not be disqualified from preferential treatment if the non-originating content of that finished good is 7% or less of the transaction value of the good on an FOB basis (or its weight, depending on the type of good). * Regional Value Content is a calculated percentage of the value of the product that represents its North American content * Tariff Shift is a substantial transformation that takes place in a NAFTA country A finished good must qualify under one of these rules to be eligible for free trade under NAFTA. This is just one example of a qualification for a free-trade agreement. If a certificate of origin is present from a supplier demonstrating that the good originated in a country under the associated free trade agreement, no further calculations are needed. When qualifying products for an FTA, the use of an automated system allows importers to stay up-to-date on international compliance regulations, as well as solicit suppliers via the web instead of manually. A functional solution should also perform the required calculations for the associated FTA during the [[Bill of Material]] (BOM) analysis, ensuring correct eligibility. ==See also== *[[List of free trade agreements]] *[[List of bilateral free trade agreements]] * EU-[[African, Caribbean, and Pacific Group of States|ACP]] [[Economic Partnership Agreements]] *[[United States free trade agreements]] *[[European Union free trade agreements]] *[[Euro-Mediterranean free trade area]] *[[Free trade areas in Europe]] ==References== {{reflist}} ==External links== * [http://www.bilaterals.org/ bilaterals.org] – "Everything that's not happening at the WTO" * [http://wits.worldbank.org/wits/gptad.html GPTAD] – "World Bank and the Center for International Business, Tuck School of Business at Dartmouth College Global Preferential Trade Agreement" * [http://www.wto.org/english/tratop_e/region_e/eif_e.xls FTAs submitted to the WTO] * [http://www.sice.oas.org/tbt/FTA_e.asp Americas FTAs] * [http://ec.europa.eu/enterprise/policies/international/facilitating-trade/free-trade/index_en.htm EU FTAs] * [http://www.acp-eu-trade.org/index.php?loc=epa/ EU-ACP countries Economic Partnership Agreements (EPA) Negotiations: Where do we stand?] * [http://app.fta.gov.sg/asp/index.asp Singapore official FTA site] * [http://www.efta.int/content/free-trade EFTA official site] * [http://www.dfat.gov.au/trade/ftas.html Australia's FTAs] * [http://usliberals.about.com/od/theeconomyjobs/i/FreeTradeAgmts.htm About.com's Pros & Cons of U.S. Free Trade Agreements] * [http://www.worldtradelaw.net/fta/ftadatabase/ftas.asp Bilateral and Regional Trade Agreements Notified to the WTO: developed by WorldTradeLaw.net and Bryan Mercurio] * [http://www.ptas.mcgill.ca/ ptas.mcgill.ca] * [http://www.wto.org/english/tratop_e/region_e/eif_e.xls Agreements notified] to the [[General Agreement on Tariffs and Trade]]/[[World Trade Organization]] * [http://www.arshiyainternational.com Arshiya International FTWZ], India's first Free Trade and Warehousing Zone. The largest multi-product Free trade area in India. {{Economic integration}} {{DEFAULTSORT:Free Trade Area}} [[Category:Trade blocs|*]] [[Category:Free trade agreements| ]] [[Category:Economic integration]] [[be-x-old:Прастора вольнага гандлю]] [[ca:Àrea de lliure comerç]] [[de:Freihandelsabkommen]] [[es:Tratado de libre comercio]] [[ko:자유 무역 협정]] [[he:אזור סחר חופשי]] [[lt:Laisvosios prekybos sritis]] [[ms:Kawasan perdagangan bebas]] [[ja:自由貿易協定]] [[no:Frihandelsområde]] [[pl:Strefa wolnego handlu]] [[pt:Área de livre comércio]] [[ru:Зона свободной торговли]] [[th:เขตการค้าเสรี]] [[vi:Hiệp định thương mại tự do]]'