|A group of states that have agreed to remove all artificial barriers to trade between themselves, such as import and export duties, export guarantees and quota restrictions, while at the same time maintaining their own separate policies on trade with other countries. This can cause problems and rules of origin have to be agreed, so that imports from countries outside the free trade area do not flood into all the countries in the group through the member with the lowest duty levels. The European Free Trade Association (EFTA), founded in 1959, has been one of the most successful free trade areas in recent years, though its impact may be rivalled by the North American Free Trade Agreement (NAFTA) which was agreed in 1992. There have also been other similar initiatives in the Caribbean and in Latin America (cf. common market).Â (MB)
Suggested Reading Geiger, T. and Kennedy, D., eds, 1996: Regional trade blocs, multilateralism and the GATT: complementary paths to free trade? London: Pinter.Â Bulmer-Thomas, V., Craske, N. and Serrano, M., eds, 1994: Mexico and the North American Free Trade Agreement: who will benefit? Basingstoke: Macmillan.