Discuss what does it mean " red tape & exchange rate policy " issues arising from free trade agreement? Red tape policy refers to rules and standards of the policies which is launched by higher authority of country to create financial cost and these regulations are followed by consumers and producers. Red tape policy consists to complete the paperwork and get licenses of it. This thing makes policy more difficult. Exchange rate policy is a policy in which country exchange foreign currency and also manage their own country currency. In free trade, exchange rate policy arising issues at the time of export and import due to the demand of currency.