Okuzeka
Economics vocabulary · Trade and Exchange Rates

Free trade

Meaning in economics, with examples

nounCommon term

In economics, free trade means: International trade with few or no barriers such as tariffs, quotas or subsidies, so that goods and services move freely between countries.

In Turkish: serbest ticaret

How it is used

Countries sign free trade agreements (FTAs) or create free trade areas. Supporters point to lower prices and the gains from comparative advantage; critics point to job losses in some industries. Türkiye's customs union with the EU, in force since 1996, goes further than a free trade area because it also has a common external tariff.

Example sentences

  1. The two countries signed a free trade agreement that removes tariffs on most industrial goods.

  2. Most economists argue that free trade raises overall income, even if some sectors lose out.

Common collocations

  • free trade agreement
  • free trade area
  • support free trade
  • free trade zone
  • tariffA tax that a government charges on goods when they are imported, which makes foreign products more expensive compared with local ones.
  • protectionismPolicies that shield domestic producers from foreign competition, for example through tariffs, import quotas or subsidies.
  • comparative advantageThe ability of a country or person to produce something at a lower opportunity cost than others; it is the basis of the gains from trade.
  • exportA good or service sold to buyers in another country; as a verb, to sell goods or services abroad.
  • importA good or service bought from producers in another country; as a verb, to bring goods or services in from abroad.

More terms: Trade and Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.