FTA (Free Trade Agreement)

A Free Trade Agreement (FTA) is a legally binding international agreement between two or more countries/regions aimed at eliminating or significantly reducing tariffs and non-tariff barriers between them, and promoting the free flow of goods, services, capital, and people. Usage scenarios: Foreign trade enterprises use FTA rules of origin to enjoy tariff preferences in the importing country and reduce transaction costs; frequently involved in negotiations, customs declaration, certificate of origin, etc. Precautions: FTAs usually have specific rules of origin (such as regional value content, change in tariff classification), and enterprises need to ensure products meet the conditions and obtain a certificate of origin; different FTAs have different preference margins and coverage, requiring case-by-case verification; an FTA is not the same as a customs union (the latter has a common external tariff) or a common market (the latter also includes free movement of factors). Compared with Most-Favored-Nation (MFN) treatment, FTA preferences are granted only to parties to the agreement and are exclusive. Foreign trade practitioners should monitor FTA developments and reasonably choose trade routes to enjoy benefits.