Liberalisation of foreign trade refers to the removal of barriers or restrictions set by the government on trade and investment. This means that goods can be imported and exported easily, and foreign companies are allowed to set up factories and offices without facing many hurdles.

With liberalisation, businesses are allowed to make decisions freely about what they wish to import or export. The government imposes much less restrictions than before and is therefore said to be more liberal. This allows domestic producers to compete with producers around the globe.