What is a Free Trade Agreement?

Free Trade Agreements are entered between two countries to agree on the terms of trade between them. The free trade agreement affects the tariffs and duties that countries impose on exports and imports.

When a Free Trade Agreement is made, it does not mean that things can be imported for free. In fact, Free Trade Agreements only mean partner countries may receive preferential treatment.

Utilizing Trade Agreement benefits for your product may need more record-keeping but can also give your product a competitive advantage over products from other countries.

The tariffs and duties depend on the classification. Even with the North American Free Trade Agreement (NAFTA), not everything means duty-free. Ultimately, duties are based on the actual commodity.

U.S Free Trade Agreements

right to make entry liquidationIn the case of the United States, Free Trade Agreements is one of the best ways to open foreign markets to U.S Exporters. It does so by reducing barriers to entry, and at the same time protect U.S interests and enhance the rule of law in the Free Trade Agreement country.

Currently, the U.S has numerous Free Trade Agreements with various countries. It continues to be in the process of negotiating agreements with several others.

Free Trade Agreements and Eligible Countries

In this article, we will name the current Free Trade Agreements, a brief description, and useful links you may use to determine the tariff or get more information on specific trade agreements.

Generalized System of Preferences (GSP)

This agreement is a trade program created by the U.S to promote economic growth in developing countries. It does so by providing preferential duty-free entry of up to 4,800 products from 129 countries and territories. GSP was instituted on January 1, 1976; expired on July 31, 2013; and reauthorized on June 2015, for another two and a half years.

Australia (AU)

The Australia – United States Free Trade Agreement (AUSFTA) is a preferential trade agreement signed on May 18, 2004. The document of the Free Trade Agreement is divided into twenty-three sections which include sections such as Agriculture, Textiles, Telecommunications and Financial services among many others.

Automotive (B)

Auto Pact or APTA is the Canada-United States Automotive Products Agreement signed in January of 1965. The signing of the agreement in 1965 removed certain automobile tariffs between the two countries. This agreement resulted in lowered prices and increased production in Canada.

Bahrain (BH)

The United States-Bahrain Free Trade Agreement (USBFTA) is a free trade agreement signed on September 14, 2004, and ratified on December 7, 2005. When the agreement came into effect, 100 percent of the two-way trade in industrial and consumer products began to flow without tariffs. This resulted in export opportunities for the United States, created jobs, and enhanced commercial relations.

air freight transportCivil Aircraft (C)

The United States is among the 32 signatories of the Agreement on Trade in Civil Aircraft. This agreement eliminates import duties on all aircraft, except military aircraft. In addition, it covers other products such as civil aircraft engines, parts, components, and flight simulators.

NAFTA (CA)

NAFTA is a trade agreement entered by Canada, Mexico, and the United States with goals to eliminate barriers to trade and investment. The agreement affected areas such as Intellectual Property, Environment, Agriculture, Transportation, jobs, and many more under the agreement.

Chile (CL)

The United States-Chile Free Trade Agreement was signed on June 6, 2003. Tariffs on 90% of U.s exports and 95% of Chilean exports to the United States were eliminated on that date.

Columbia (CO)

This trade agreement was implemented on May 15, 2012. This comprehensive trade agreement includes highlights such as

  • New Opportunities for U.S. Workers, Manufacturers, Farmers, and Ranchers
  • Level Playing Field for the U.S. Investors and U.S. Services Providers
  • Commitments to Protect Labor Rights
  • Commitments to Protect the Environment

African Growth & Opportunity Act (D) 

The African Growth & Opportunity Act (AGOA) was enacted on May 18, 2000, and has since been renewed until 2025. The agreement enhances market access to the US for qualifying Sub-Saharan African (SSA) countries.

Caribbean Basin Economic Recovery Act CBERA (E)

This act provides preferential trade and tax benefits to eligible Caribbean countries. Additionally, it provides duty-free treatment for eligible products. The CBERA has been repealed and amended several times.

Israel (IL)

ocean transportThe United States-Israel Trade Agreement was created to lower trade barriers in certain goods, and reduce or eliminate rates of duty on exported merchandise from Israel to the US.

Andean Trade Promotion & Drug Eradication Act (J)

The Andean Trade Promotion & Drug Eradication Act (ATPDEA) is an agreement in which the US grants duty-free access to a wide range of exports from Bolivia, Colombia, Ecuador, and Peru.

Jordan (JO)

The Jordan Free Trade Agreement was fully implemented on January 1, 2010. In effect, products manufactured in Israel, Jordan, Egypt, or the West Bank and Gaza may enter the U.S duty-free. Furthermore, reducing barriers for services, protecting intellectual property, ensuring regulatory transparency, and requiring effective labor and environmental enforcement.

Pharmaceutical Products (K)

This trade agreement was signed in Uruguay among WTO trading partners, the U.S included. It provides a reciprocal tariff elimination for pharmaceutical products and for chemical intermediates used in the production of pharmaceuticals.

Dominican Republic-Central America DR-CAFTA (P)

This trade agreement promotes stronger investment and trade ties, stability, and prosperity throughout the region and along the Southern border.

Intermediate Chemicals for Dyes (L)

This trade agreement provides duty-free treatment on Intermediate Chemicals for Dyes from partner countries.

Caribbean Basin Trade Partnership Act (R)

The Carribean Basin Trade Partnership Act (CBTPA) was signed into law on May 18, 2000. It includes 23 countries under the Carribean basin region and it seeks to address issues from the 1983 Caribbean Basin Initiative.

Morocco Free Trade Agreement (MA)

This Free Trade Agreement was in force on January 1, 2006. It supports economic and political support for Morocco and reduces trade barriers for U.S exports to Morocco.

Singapore (SG)

The U.S.-Singapore Free Trade Agreement is the first U.S. FTA with a nation in Asia. The agreement guarantees zero tariffs on all U.S goods entering Singapore. At the same time, products from Singapore have duties phased-out at different stages, some products being duty-free while others being duty-free for a ten-year period.

Oman (OM) 

The Oman Trade Agreements was effective January 1, 2009, and contains the following provisions:

  • duty-free access on virtually all industrial and consumer products in its tariff schedule
  • duty-free access for U.S. agricultural products in 87% of agricultural tariff lines
  • 100% of Oman’s current exports of agricultural products to the United States

Panama (PA)

The Panama-United States Trade Promotion Agreement has been in force since October 2012. The agreement strives to eliminate obstacles to trade, consolidate access to goods and services and preferential treatment for private investment in and between both nations.

Peru (PE)

The United States-Peru Trade Promotion Agreement has similar objectives with the Panama Free Trade Agreement. It has additional objectives such as institutional, intellectual property, labor and environmental policies, among others.

South Korea (KR)

The Free Trade Agreement between Korea and the United States was first signed on June 30, 2007, with a renegotiated version signed in early December 2010. Another renegotiation took place from late 2017 to late March 2018, when an agreement was reached between both governments

Useful Links:

Special Tariff Programs and their Eligible Countries

More Information on Free Trade Agreements

FTA Tariff Tool

This blog post represents a high-level overview of the different Free Trade Agreements. It is important to remember that trade agreements are constantly changing, evolving, expiring, and are subject to renewal by Congress.

Do you think your export or import will be affected by a Free Trade Agreement? We would be glad to help you out. Call 303-365-1000 or email us anytime.