Free trade

Definition

Free trade is a policy adopted by some international markets, in which countries' governments do not restrict imports from, or exports to, other countries. It allows for the unobstructed exchange of goods and services between nations without punitive tariffs, quotas, or prohibitive regulations.

Related terms

Tariff:

A tax imposed on imported goods and services, which can raise the cost of foreign products to encourage or protect domestic industry.

Quota:

A government-imposed trade restriction that limits the number or monetary value of goods that can be imported or exported during a specific time period.

Globalization:

The process by which businesses or other organizations develop international influence or start operating on an international scale, often influenced by free trade agreements