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Free Trade Area (FTA) – Zero Tax! 0️⃣

Definition: A group of countries where tariffs and quotas are eliminated (0%) on trade between members.

  • But: Each member keeps its own tariff for non-members.

Example: NAFTA (USA, Canada, Mexico).

  • USA to Canada = 0% Tax.
  • USA to China = 20% Tax.
  • Canada to China = 10% Tax. (They can have different external rates).
Rules of Origin

Problem: China sends goods to Canada (10% Tax) and then Canada sends to USA (0% Tax). China cheats the USA! Solution: Rules of Origin. Goods must be "Made in Canada" to get 0% tax. Just passing through doesn't count.

Quiz Time! 🎯

Test Your Knowledge

Question 1 of 5

1. In an FTA, tariffs between members are:

Reduced
Eliminated (Zero)
Increased
Doubled

💡 Final Wisdom: "FTA is 'Free' only for members. Outsiders still pay the price!" 🚪

Next up: Customs Union - One Wall for the World! 🧱

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