Free Trade Agreements Explained: The List, With Examples and Status
Free trade agreements lower the barriers to trade between their signatories. What follows is a list of the agreements that shaped the last decade of argument, with examples of the specific mechanisms that made each one contentious, and with the pros and cons set out as they were actually argued.
Free trade agreements are explained here chapter by chapter rather than in the aggregate, because the tariff schedule is rarely what the fight was about.
Free Trade Agreements Explained: The List, With Current Status
Status matters more than signature. An agreement can be signed and never applied, applied in part for years, or rebuilt after a signatory walks away. The list below gives the current standing of each of the six free trade agreements, and the sections after it set out the pros and cons as each side argued them.
Transatlantic Trade and Investment Partnership
European Union and United States. Talks opened in July 2013 and ran to 2016; the Council declared the negotiating mandates obsolete in April 2019.
European Commission: EU trade relations with the United States
Comprehensive Economic and Trade Agreement
European Union and Canada. Signed in October 2016 and provisionally applied since September 2017; the investment-court chapters await full ratification.
Trade in Services Agreement
A plurilateral negotiation among roughly two dozen WTO members. The last round was held in late 2016 and no further round has been scheduled.
Comprehensive and Progressive Agreement for Trans-Pacific Partnership
Eleven Pacific economies. Rebuilt after the United States withdrew from the original TPP in 2017; signed in March 2018 and in force since December 2018.
New Zealand Ministry of Foreign Affairs and Trade, the CPTPP depositary
United States–Mexico–Canada Agreement
Replaced NAFTA on 1 July 2020, adding labour and automotive rules-of-origin chapters and a rapid-response labour mechanism.
Office of the United States Trade Representative on the USMCA
Regional Comprehensive Economic Partnership
Fifteen Asia-Pacific economies including the ASEAN members, China, Japan, South Korea, Australia and New Zealand. In force since January 2022.
Worked Examples: The Chapters That Decide Things
Four chapters do most of the work in a modern agreement, and none of them is the tariff schedule. Each is set out below on its own terms, with the agreement that makes the clearest example of it.
Rules of origin
Because a free trade area keeps separate external tariffs, it must define how much of a product has to originate inside the area. Without that definition the lowest external tariff in the bloc becomes the effective tariff for everyone, since goods would simply enter through whichever member charges least.
The USMCA raised the regional value content required for cars and added a labour-value rule tying preferential treatment to wage floors — an example of a tariff schedule being used to reach industrial policy. A carmaker meeting the old NAFTA threshold could fail the new one without changing anything about the vehicle, which is why the automotive annexes were fought over line by line.
Regulatory cooperation
Where two blocs recognise each other's standards, a product tested once can be sold in both, and the duplicated certification cost disappears. That is the largest single saving most impact assessments of these agreements identify.
The dispute is over whose standard governs when the two differ in kind rather than in strictness. A rule that bans a substance until it is shown to be safe and a rule that permits it until it is shown to be harmful cannot be reconciled by picking the stricter one, because they are not on the same scale. This was the sharpest of the TTIP examples and the one that generalised least well to the other agreements.
Investment protection
Most of these agreements give foreign investors a route to compensation when state action devalues their investment. The principle is old and largely uncontested; the contested question is the forum.
Ad-hoc arbitration, as in the older bilateral treaties, seats a tribunal for a single case from a pool of commercial arbitrators. CETA instead created an Investment Court System with a standing roster of publicly appointed adjudicators and an appeal stage. The difference decides who is permanent, who is reviewable and whether a decision binds the next case, which is why those chapters are the ones still awaiting ratification.
Services and procurement
TiSA was an attempt to liberalise services across two dozen economies outside the WTO framework, covering everything from financial services to data flows and public procurement. It stalled after the 2016 round and no further round has been scheduled.
Services liberalisation has since travelled inside the broader regional agreements instead — which is why the free trade agreements now in force cover far more than trade in goods, and why their services chapters need to be explained separately from their tariff schedules. Procurement is the part that reaches furthest into domestic policy: it governs which suppliers a public body may prefer, and on what grounds.
Free Trade Agreements: The Pros and Cons, As Argued
Both cases below are stated as their own advocates stated them, at the strongest version rather than the most easily answered one. They are not weighed against each other here, because the weighing depends on which effect a reader is asking about.
The case for
Lower tariffs reduce input costs and consumer prices, and the effect compounds along a supply chain that crosses a border more than once. Predictable rules and mutual recognition cut the compliance cost of exporting, which weighs most on smaller firms — a large exporter can absorb duplicate certification, a firm of thirty people often cannot.
Binding dispute procedures give exporters recourse that diplomatic pressure does not, and a procedure that a small economy can invoke against a large one is worth more to the small one. Larger integrated markets support specialisation, and regional agreements have advanced where the multilateral round did not: the WTO's Doha round has produced no comprehensive package since it opened in 2001, and the agreements on this page are what governments built instead.
The case against
Gains and losses fall on different people. Aggregate growth can coexist with concentrated job losses in exposed sectors and regions, and an average that improves tells a displaced worker nothing about their own position. Adjustment is assumed in the models and has to be delivered by domestic policy that the agreement itself does not require.
Negotiating in confidence weakens parliamentary scrutiny, since the text arrives only when it can no longer be amended. Investment protection can raise the cost of regulating in the public interest, because a measure that survives judicial review at home may still found a claim for compensation abroad. Standards recognition can pull the stricter regime toward the looser one. And rules of origin make the resulting system administratively dense enough that the smallest firms — the ones the compliance argument is made for — are the least able to use it.
Both cases were made at scale in 2015. The register of 753 events across 47 countries is the record of how the second was organised.
Questions About Free Trade Agreements
How many free trade agreements are in force worldwide?
Several hundred. The WTO maintains a register of regional trade agreements notified to it, and the count has grown steadily since the 1990s as bilateral and regional deals proliferated alongside the stalled multilateral track.
What is the difference between a free trade area and a customs union?
In a free trade area, members remove tariffs between themselves but each keeps its own external tariff, which is why rules of origin are needed. In a customs union, members apply a common external tariff, so goods circulate freely once inside and origin rules between members become unnecessary.
Why do some agreements apply before they are ratified?
Provisional application lets the parts of a treaty that fall within the negotiating bloc's own competence take effect while the chapters that touch national competence wait for each parliament. CETA is the standing example.
Do trade agreements have to include investment protection?
No. It is a policy choice, and a recent one to unbundle: several agreements now separate the trade chapters from the investment chapters so the first can enter into force while the second is ratified separately. CETA is the clearest example, and it is why parts of that agreement have applied since 2017 while others have not.