Free Trade Agreements

Question 1

What is a FTA

Answer 1

A free trade agreement is a partnership between countries t allow ‘the free’ trade of goods and reduce or remove any barriers to trade or investment.

• FTA’s must be mutually beneficial
• Can cover raw, manufactured or processed goods/commodities and services

Question 2

Negatives of an FTA

Answer 2

Negatives

• Can cause ‘dumping’ of cheap goods
• Reduce the value of local goods/services
• Reduce development of local industry and stifle growth
• Create dependences
• Weaken local economies
• Reduce government revenue (not collecting taxes eg. Land rate, income taxes)

Question 3

Advantages of a FTA

Answer 3

Advantages

• Create allies/partnerships
• Reduces tariffs/cost of importing
• Provides more variety/range/options for consumers
• Increases investment
• Improves market access
• Improves reliability in the supply of goods/services

Question 4

Examples of an FTA

Answer 4

Examples of Free Trade Agreements

• Trans-Pacific Partnership
• China – Australia (chAFTA