free trade association

A free trade association is a group of countries that have agreed to reduce or eliminate trade barriers among themselves. This policy aims to promote economic integration and increase trade by removing tariffs and other restrictions. The North American Free Trade Agreement (NAFTA), signed in 1992 by Canada, Mexico, and the United States, created one of the world's largest free-trade areas. It was later replaced by the United States–Mexico–Canada Agreement (USMCA). The theoretical basis for free trade, as argued by Adam Smith, is that specialization and the division of labor among countries lead to greater efficiency and higher overall production. While countries may sometimes restrict trade for specific advantages, the general trend since the mid-20th century has been towards reducing trade barriers globally, facilitated by organizations like the World Trade Organization.