When looking into how to export to overseas markets, take into consideration whether the countries you are targeting have a free trade agreement (FTA) with the United States. While the specifics of each FTA vary, they generally provide U.S. sellers with lower import duties, making it easier and cheaper to export products or services. FTAs can also make it easier for U.S. companies to bid on foreign government procurements. Some FTAs require a written certificate of origin to accompany shipments if the value exceeds a certain dollar amount. There are a lot of variables when it comes to FTAs, so watch Introduction to Free Trade Agreements, the second of our five-video Make the Export Sale set. You’ll also find additional in-depth information in our FTA overview further below. Last Published: 3/14/2018
An FTA is an agreement between two or more countries where the countries agree on certain obligations that affect trade in goods and services, and protections for investors and intellectual property rights, among other topics. For the United States, the main goal of trade agreements is to reduce barriers to U.S. exports, protect U.S. interests competing abroad, and enhance the rule of law in the FTA partner country or countries. The reduction of trade barriers and the creation of a more stable and transparent trade and investment environment make it easier and cheaper for U.S. companies to export their products and services to trading partner markets.
There are 14 U.S. free trade agreements in force with 20 countries: Australia, Bahrain, Chile, Colombia, Israel, Jordan, Korea, Morocco, Oman, Panama, Peru, Singapore; DR-CAFTA (Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, & Nicaragua); and NAFTA (Canada & Mexico).
U.S. FTAs typically address a wide variety of government activity. One example is the reduction or elimination of tariffs charged on all qualified products coming from the other country. For example, a country that normally charges a tariff of 5 percent of the value of the incoming product will eliminate that tariff for products that originate (as defined in the FTA) in the United States.
Documenting how a product originates, or meets the rules of origin, can make using the FTA negotiated tariffs a bit more complicated. However, these rules help to ensure that U.S. exports, rather than exports from other countries, receive the benefits of the agreement.