FTA and FTZ: what are the differences?

FTA and FTZ, since their names in Chinese are the same, are easily mistaken by lots of people. However, in nature, they are two different concepts.

An FTA (Free Trade Area), derived from WTO provisions, means that "trade within the group is duty free but members set their own tariffs on imports from non-members (e.g. NAFTA)."

It stands for a group of two or more economies that, while retaining their own foreign trade policies, substantially eliminate tariffs and other trade restrictions between each other. The scope of a free trade area covers the entire tariff territory of all members who have signed the free trade agreement.

An FTZ (Free Trade Zone) is a domestic pilot free trade zone in China. The first pilot free trade zone was debuted in Shanghai in 2013. Through gradual expansion 21 FTZs have been established across the country. The guideline of the pilot FTZs is to explore new pathways and accumulate new experience for the comprehensive deepening of reform and the expansion of opening up.