What distinguishes a Free Trade Agreement (FTA)?

A Free Trade Agreement (FTA) is primarily distinguished by its role in facilitating trade between member countries by eliminating tariffs and import quotas. By removing these barriers, FTAs aim to enhance trade flows, making it easier and less costly for countries to exchange goods and services. This reduction of tariffs means that products can be imported and exported at more competitive prices, benefiting consumers and businesses in the involved nations.

The elimination of import quotas further enhances this trade by allowing a greater volume of goods to be exchanged, which fosters economic integration and cooperation among member countries. Such agreements are designed to promote economic growth and increase market access, leading to an overall increase in trade activities.

The other choices—establishing price controls, mandating compliance with environmental regulations, and restricting the volume of goods traded—do not accurately reflect the fundamental purpose of an FTA. Instead of controlling prices or imposing limitations on trade, FTAs focus on reducing barriers to trade, thereby encouraging a freer flow of goods between countries.