Glossary
What is a free trade agreement (FTA)?
A free trade agreement (FTA) is a treaty between two or more countries that reduces or removes tariffs and other barriers on trade between them. It creates a free trade area but the agreement is the legal instrument, not the zone itself. |
What does a free trade agreement contain?
- Tariff schedules setting which goods get preferential rates, and on what timetable
- Rules of origin deciding which goods actually qualify
- Provisions on services, procurement, investment and dispute settlement
- Often chapters covering standards, digital trade and sustainability
Preference is never automatic
An FTA lowers duty only for goods that meet its rules of origin and are claimed correctly with valid proof. Goods made in a partner country from largely third-country inputs may not qualify at all. The agreement creates the opportunity; the origin work is what turns it into a saving.
Agreement, area or union?
The agreement is the treaty. The free trade area is the zone it creates. A customs union goes further, adding a common external tariff. The three terms get used loosely in conversation but on a declaration, only the specific agreement being claimed matters.
iCustoms checks preference eligibility against origin before you claim it, not after HMRC asks. |
