<h1 class="ql-align-center">Free Trade Agreement (FTA)</h1> <h2>Context:</h2> <ul><li>India and Australia have agreed to conclude a Free Trade Agreement (FTA) by the end of 2022.</li></ul> <h2>About:</h2> <ul><li>FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them.</li></ul> <ul><li>FTAs, normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading, etc.), but can also cover other areas such as intellectual property rights (IPRs), investment, government procurement, etc.</li></ul> <ul><li>Currently, 14 Regional Trade Agreements(RTAs) are in force in India with a dozen more under negotiation.</li></ul> <ul><li>Asia Pacific Trade Agreement (APTA),1st RTA of which India became a member was the Bangkok Agreement in 1975. In 2005, this regional initiative between developing economies was re-incarnated as APTA.</li></ul> <ul><li>India's first bilateral FTA with Srilanka (ISFTA) came into effect in 2000.</li></ul> <ul><li>India has not signed any major FTA in the last 10 years.</li></ul> <ul><li>India signed its last trade agreement, a Comprehensive Economic Cooperation Agreement (CECA) with Malaysia in 2011</li></ul> <h2>Other Types of Trade agreements:</h2> <h3>Preferential Trade Agreement (PTA): </h3> <ul><li>In a PTA, two or more partners agree to reduce tariffs on an agreed number of tariff lines.</li></ul> <ul><li>For example, India MERCOSUR PTA.</li></ul> <h3>Comprehensive Economic Cooperation Agreement (CECA) and Comprehensive Economic Partnership Agreement (CEPA):</h3> <ul><li>These terms describe agreements that consist of an integrated package on goods, services, and investment along with other areas including IPR, competition, etc.</li></ul> <ul><li>The India Korea CEPA is one such example.</li></ul> <h3>Custom Union: </h3> <ul><li>In a Customs union, partner countries may decide to trade at zero duty among themselves, however, they maintain common tariffs against the rest of the world.</li></ul> <ul><li>An example is the Southern African Customs Union (SACU).</li></ul><h3> </h3><h3>Common Market:</h3> <ul><li>A common market is a Customs Union with provisions to facilitate free movements of labour and capital, harmonize technical standards across members, etc.</li></ul> <ul><li>European Common Market is an example.</li></ul> <h3>Economic Union: </h3> <ul><li>Economic Union is a Common Market extended through further harmonization of monetary policies and shared executive, judicial &amp; legislative institutions.</li></ul> <ul><li>European Union (EU) is an apt example of this type</li></ul> <h2>Hierarchy of trade agreements:</h2> <img src="https://sunyaias-resources.s3.ap-south-1.amazonaws.com/content/62812961-4b0e-11ec-838b-9d2af53a8eac.png">