With reference to Free Trade Agreements, consider the following: Under FTAs, two or more countries or trading blocs primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them. FTAs and Preferential Trade Agreements (PTAs), both maintain a positive list of products on which duty is to be reduced. Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A

Notes:

Statement 1 is correct: FTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them, but (in contrast to a common market) capital or labor may not move freely.
Statement 2 is incorrect: The key difference between an FTA and a PTA is that while in a PTA there is a positive list of products on which duty is to be reduced; in an FTA there is a negative list on which duty is not reduced or eliminated.

Source: Article