A free trade area refers to a group of countries that have signed a free trade agreement whereby trade or tariff barriers are eliminated or reduced. This is intended to increase trade in the area and the free movement of goods among the countries that make up the free trade area.
However, each of the member countries may impose different barriers or tariffs on third countries that are not members of the treaty.
Some examples of trade treaties are:
- Mercosur : Southern Common Market which includes Economy of Argentina, Brazil, Paraguay and Uruguay
- NAFTA: Free Trade Agreement of the Americas consisting of Canada, United States and Mexico.
- European Union
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