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Term

Free trade agreement (FTA)

A free trade agreement is a treaty under which two or more countries remove duties on substantially all trade in goods originating in them. Goods get the lower rate only if they meet the agreement's rules of origin and the importer claims it with proof. The WTO counted 388 regional trade agreements in force on 1 October 2026.

Also called FTA, regional trade agreement, preferential trade agreement, CEPA, economic partnership agreementUpdated 14 October 2026

How a claim works

  • Check the goods originate under that agreement's rules — to get reduced or zero tariffs, products must comply with its specific rules of origin.
  • Hold the proof the agreement names, because customs in the importing country verifies the claim.
  • Claim the preferential rate on the import declaration, and keep the records behind it.

The WTO treats any reciprocal trade agreement between two or more partners as a regional trade agreement, and counts at least 84 more in force but not yet notified to it. Under GATT Article XXIV, a free-trade area removes duties on substantially all the trade in products originating in its members.

Three agreements, three ways to prove origin

AgreementIn forceProof
USMCA — US, Mexico, Canada1 July 2020No set form: any format with the nine minimum data elements
EU–Japan EPA1 February 2019Proof of origin, which EU customs verifies
India–UAE CEPA1 May 2022Certificates of origin — 4.45 lakh issued by July 2026

Under the India–UAE CEPA, the UAE removed duty on 97.4% of its tariff lines, covering 99% of its imports from India, and India gave immediate duty elimination on over 80% of its lines. India's CAROTAR rules make the importer declare in the bill of entry that the goods qualify as originating, and keep the documents for at least five years.

Worked example: a CIF shipment into Dubai

CIF value USD 100,000 · standard duty 5% → USD 5,000 · same goods on a tariff line at 0% under the CEPA, origin proven → USD 0 · duty saved: USD 5,000

Dubai's customs tariff is 5% of the CIF value (UAE Government portal). Whether a given line is at 0% depends on the CEPA schedule; the shipment is illustrative.

The mistake people make

Claiming the preference without the origin work behind it. The EU says that if goods turn out not to be entitled to preferential origin, the preference is refused and unpaid duty may be recovered; the US expects reasonable care, and India requires due diligence from the importer. A supplier's certificate does not replace checking the rule.

FAQ

Free trade agreement (FTA): common questions

How many free trade agreements are there?
The WTO counted 388 regional trade agreements in force as of 1 October 2026, with at least 84 more in force but not yet notified to it.
Does USMCA need a certificate of origin?
No set form. CBP says there is no required certificate of origin form for USMCA; any format works if it carries the nine minimum data elements in Annex 5-A.
What happens if an FTA claim turns out wrong?
The preference is refused and the duty can be recovered. In the EU, unpaid duty may be recovered after the fact; in India, CAROTAR requires the importer to keep origin records for at least five years.