Trade Agreement

A trade agreement is a formal arrangement between two or more countries that governs how they trade with each other. Trade agreements typically reduce or remove tariffs, set common rules of origin, and ease customs procedures to encourage the flow of goods and services.

• Free Trade Agreement (FTA) — removes most tariffs between member countries.
• Preferential Trade Agreement (PTA) — lowers tariffs on selected goods.
• Bilateral vs Multilateral — between two countries, or among several.

For buyers and suppliers, a trade agreement can significantly lower landed cost — goods that qualify under the rules of origin may enter at a reduced or zero duty rate.