What is a Free-Trade Agreement (FTA)?

A Free Trade Agreement (FTA) is a treaty between two or more countries that reduces or removes trade barriers such as import duties or quotas between its members.

How they differ from a customs union

While an FTA is similar to a customs union, there’s one key difference:

• FTA members set their own tariffs and trade rules for non-member countries.
• Customs union members share a common external tariff for all non-members.

Example FTAs

• USMCA (United States–Mexico–Canada Agreement) – A trilateral agreement between the U.S., Mexico, and Canada.
• Australia’s FTAs – Australia currently has 20 FTAs in force, with more under negotiation.

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Why it matters: If your product qualifies for preferential treatment under an FTA, you may be able to reduce or eliminate import duties - lowering your total landed cost.