Investment
An agreement between countries to eliminate or reduce trade barriers and promote trade and investment.
The WTO glossary defines the resulting area rather than the instrument: in a free trade area, “trade within the group is duty free but members set their own tariffs on imports from non-members”. That second clause generates most of the administrative work a free trade agreement creates. Because each member keeps its own external tariff, the agreement has to establish which goods actually count as the partners’ own — otherwise imports would route through whichever member has the lowest external duty. Hence rules of origin, certificates, and verification regimes, none of which a customs union needs to the same degree. The glossary contrasts this with a customs union, whose members “apply a common external tariff”.
What a glossary settles, and what it does not. The WTO’s glossary is the organisation’s own plain-language guide to its vocabulary, so it is authoritative for what the term means in WTO usage. It is not the legal text. Where an obligation is at stake, the operative words are in the agreement the glossary points to — GATT, GATS, TRIPS and the rest — and those are what a panel would read. Use the glossary to know what is being discussed, and the agreement to know what is owed.
Deeper treatment: this term also has a full entry in the Business Library.
From the AJG lexicon archive (July 2026).
Developed by Amit Jain at allfrontierglobal.com
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