A free trade area (FTA) is a region where member countries agree to remove tariffs and other trade barriers on goods traded between them. Importantly, each country keeps the right to set its own separate trade policies regarding countries outside the group.

Key features include:

• Countries maintain independent trade policies with non-member nations.
• There is no common external tariff; each country manages its own trade deals with outsiders.
• Examples include the European Free Trade Association (EFTA) and the North American Free Trade Agreement (NAFTA).
• The primary benefit is that businesses can sell to larger markets without paying extra import taxes.
• Rules of origin are often required to ensure that goods from non-member countries do not enter the area to avoid tariffs.
• FTAs are usually the first step toward deeper economic integration between nations.