FEATURES OF FREE TRADE
1) Trade of goods without taxes by means of special quotas or removal of restrictions.2) Removal of restrictions on trade limitations.3) Free access to markets4) Free flow of capital and 5) Free flow of labor.
Trade of goods without taxes by means of special quotas or removal of restrictions.The trade of goods in a free trade area is achieved by the means of certain rules inconsensus on certain agreements. These rules are agreed upon by the respectivegovernments and adhered to by the same. The free trade allows the trade of goodsin the respective regions. Nations in these regions mostly share a common currency.This allows the nations to transact in terms of freedom from rules of nationaldifference in denominations.
Removal of restrictions on trade limitations.Countries usually have a fixed state control on the inflow and outflow of trade andrestrict it in terms of the amount of total capital flow. Thus the government forms theregulatory body to regulate and stabilize the economy and sees to it that theregulations are strictly followed. In a free trade, governments have a form of mutualunderstanding over the unrestricted flow of capital and goods. Thus the governmentsact as an initiator of free customs and other duties which limits the trade. Thesecountries either have the same economic pattern (As in members of EuropeanUnion) or have a dependency of markets (As Nepal and India).
Free access to marketsCountries of these zones have free access to one another¶s markets which allowsthem to trade freely in terms of exports and imports. The regulations of customimports are relaxed which them to invest in each other¶s markets freely without anybinding. Also these countries share the knowledge and information regarding eachother¶s market conditions which help in demand forecasting before investment. Alsothese helps to avoid future losses suffered due to insufficient knowledge of themarket.
Free flow of capitalCountries of the free trade zones usually trade through a common currency. Thisallows them to trade freely in terms of capital in spite of the different economic statesof the country. Even though usually these countries share a common economicstatus( Example : Members of the European Union.), certain free trade zones (like Nepaland India )have a memorandum of understanding which allows them to share acommon currency and to transact freely in terms of money flow .
Free flow of labor.These countries have a liberal visa and immigrations for citizens belonging to other countries. These countries allow the free flow of labor in each other which helps in