[2] Such agreements usually "center on a chapter providing for preferential tariff treatment", but they also often "include clauses on trade facilitation and rule-making in areas such as investment, intellectual property, government procurement, technical standards and sanitary and phytosanitary issues".
[4] In a free-trade area without harmonized external tariffs, to eliminate the risk of trade deflection, parties will adopt a system of preferential rules of origin.
[7] However, in practice, the term is now widely used in politic science, diplomacy and economics to refer to agreements covering not only goods but also services and even investment.
[8]: 104 The OED records the use of the phrase "free trade agreement" with reference to the Australian colonies as early as 1877.
They first address one key element of FTAs, which is the system of embedded tribunals which act as arbitrators in international trade disputes.
These serve as a force of clarification for existing statutes and international economic policies as affirmed in the trade treaties.
While older trade deals are deemed “shallower” as they cover fewer areas (such as tariffs and quotas), more recently concluded agreements address a number of other fields, from services to e-commerce and data localization.
This feature creates the possibility of non-parties may free-riding preferences under an FTA by penetrating the market with the lowest external tariffs.
Such risk necessitates the introduction of rules to determine originating goods eligible for preferences under an FTA, a need that does not arise upon the formation of a customs union.
[22] Basically, there is a requirement for a minimum extent of processing that results in "substantial transformation" to the goods so that they can be considered originating.
Since there are hundreds of FTAs currently in force and being negotiated (about 800 according to ITC's Rules of Origin Facilitator, counting also non-reciprocal trade arrangements), it is important for businesses and policy-makers to keep track of their status.
The database, visible via the online tool Market Access Map, includes information on tariff and non-tariff barriers in all active trade agreements, not limited to those officially notified to the WTO.
Up until 2019, Market Access Map has provided downloadable links to texts agreements and their rules of origin.
[29] The new version of Market Access Map forthcoming this year will provide direct web links to relevant agreement pages and connect itself to other ITC's tools, particularly the Rules of Origin Facilitator.