Unlike a customs union, parties to a free trade agreement do not retain common external tariffs, which means they apply different tariffs as well as other policies with respect to non-members. This feature allows non-parties to obtain footsp preferences under a free trade agreement by entering the market with the lowest external tariffs. Such a risk requires the introduction of rules for determining which originating products are eligible for preferences under a free trade agreement, a need that does not arise in the context of the creation of a customs union.  In principle, a minimum volume of processing is required, resulting in a “substantial transformation” of the goods in order for them to be considered originating. Regional trade agreements have the following advantages: free trade allows for the unlimited import and export of goods and services between two or more countries. Trade agreements are forged to reduce or eliminate tariffs on imports or quotas on exports. These help participating countries to act competitively. The creation of free trade areas is considered an exception to the most-favoured-nation principle within the World Trade Organization (WTO), since the preferences that parties to a free trade area grant exclusively to each other go beyond their accession obligations.  Although Article XXIV of the GATT allows WTO members to establish free trade areas or to adopt interim agreements necessary for their establishment, there are several conditions with respect to free trade areas or interim agreements that lead to the creation of free trade areas. . . .