What is Free Trade Area?
In an FTA, a coalition of nations establishes a trade agreement aimed at reducing or eliminating barriers like tariffs and quotas and supporting the free flow of goods and services among its member nations. The advantages of FTAs for businesses are manifold, encompassing improved access to affordable, high-quality products, overall price reductions, heightened production efficiency and innovation, increased economic development, elevated living standards, and comprehensive economic growth. Furthermore, FTAs stimulate healthy competition, compelling nations to enhance their efficiency to remain competitive globally, resulting in higher-quality products at reduced costs. The elimination of tariffs and quotas in free trade environments prevents monopolies, encouraging market diversity and lower prices. Notable examples of FTAs include the European Union and the United States, which actively participate in 14 free trade areas with 20 different countries. Additionally, FTAs can be specific to regions or countries, as exemplified by agreements like the Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates or the India-Sri Lanka Free Trade Agreement (ISFTA).