Free Trade Areas

A free trade area is an agreement between two or more countries to reduce or eliminate customs duties and non-tariff trade barriers between the member countries while maintaining individual tariff programs for external countries.

A free trade area allows for the reduction or elimination of internal tariffs and trade barriers between member countries, while maintaining individual tariff programs for external countries. On the other hand, a customs union not only has internal tariff reduction or elimination but also establishes a common external tariff on imported products from countries outside of the union.

The United States has free trade agreements with Canada and Mexico (NAFTA/TLCAN) as well as a separate agreement with Israel.