During the FTA negotiation process, participating countries agree to offer each other preferential market access. This is done by reducing the Most Favoured Nation (MFN) tariffs: import tariffs applied on imports of goods from all third party countries. The reduced tariffs are known as preferential tariffs as they offer preferential treatment to FTA members. They are negotiated under each agreement separately and differ substantially between agreements. Under an FTA, the preferential tariffs applied by members can differ for the same product – preferential import tariff offered by one FTA party can differ from the tariff offered by another for the same product. While preferential tariffs are often set at 0% it is important to note that FTAs do not offer duty free access for all products (i.e. all tariff lines in HS Classification). Preferential tariffs can be set at any level between the MFN tariff and 0%. For a certain group of goods which are used for a particular purpose or are of a special nature, there are applied these reduced tariff rates in addition to the Fulfillment of certain criteria and conditions. The goods for which the customs tariff level is reduced are grouped into:Pure breed animals for breeding or fattening and breeding eggs;seeds for planting;goods for industrial use, electric isolation oil. In addition the liberalisation of tariffs can also occur in stages over a number of years. For example, a duty on a product can be reduced from 8% MFN rate over three years: lowered to 5% in the first year, to 3% in the second year to 0% in the third year. Disclaimer Our content is not in any way legal advice or binding. The information provided by might not be the official legal or full definition. Also when pursuing a specific transaction you are encouraged to conduct your own due diligence and to consult legal counsel as appropriate.