Hi Joan
There are basically 3 different areas to your question.
i) FTPS is basically FTP over SSL/TLS which is analogous to HTTPS (HTTP over SSL/TLS). If the external party is hosting the FTPS server, then they need to send to you their public SSL certificate and you need to import the Root CA cert into TrustedCA view in your NWA key storage. This is in order to achieve mandatory server authentication for FTPS. Refer to the following blog on configuration of the FTPS protocol.
How to configure FTPS in File Adapter.
ii) Client authentication is an optional feature. It basically means you can use a certificate to "represent" yourself when logging in to the FTPS server, instead of the common user/password approach. If the external party's requirement is to use client authentication, then you need to provide your public X.509 certificate for them to import into their server.
iii) Encryption of the file content via PGP is independent of the transport protocol (i.e. FTPS in your case). Encryption is achieved using Adapter modules in the communication channel. Your PI 7.11 system needs to be on at least SP08 in order to install the Secure Connectivity Add on that contains the PGP module. Refer to the following on how to use the encryption module.
PGPEncryption Module: A Simple How to Guide
You need to encrypt based on the external partner's public PGP key, so they need to share that with you. Only if they require PGP signature when you encrypt, then you need to also share your public PGP key with the partner.
Hope this helps. Let me know if you require more information.
Rgds
Eng Swee