A free trade area (FTA) is a group of countries that has agreed to abolish all internal barriers to trade among its members. Country members of a free trade area can and do maintain independent trade policies vis-a-vis the third countries. To avoid trade diversion in favor of low-tariff members,a system of certificates of origin is used and customs inspectors police the borders between members.
FREE TRADE AREA IN TRANSNATIONAL MARKETING
Examples of FTAs are the Indian Free Trade Area formed in 1960 and the Canada-U.S. Free Trade Area, which formally began in 1989.