US Free Trade Agreements
The US has many trade programs and agreements with numerous countries worldwide. With 15 Free Trade Agreements (FTAs) in place, there is ample opportunity for businesses to find benefit in these programs. Free trade agreements allow qualifying goods to be imported at a reduced rate and, in some instances, a duty-free rate, should they meet the eligibility requirements.
If goods are eligible for one of these free trade programs, businesses can benefit significantly from reduced tariffs, opportunities for expansion, and new avenues of investment. These agreements have positively impacted the prosperity of the US and our trading partners.
According to the International Monetary Fund (IMF), nations benefit when they buy and sell from one another. Today we will provide you with an overview of the FTAs in the US and the list of agreements still under negotiation.
Benefits Of Understanding Free Trade Agreements
Why would a commercial business that imports goods into the United States want to know about FTAs with the US?
A commercial business that imports goods into the United States benefits from FTAs with the US for a few key reasons:
- Tariff Reduction: FTAs often eliminate or reduce tariffs on goods traded between the participating countries. This can result in cost savings for the importing business, making their products competitive in the US market.
- Reduced Non-Tariff Barriers: FTAs can also help mitigate non-tariff barriers by creating a positive trading environment between nations. This means goods from trading nations are less likely to encounter barriers such as quotas, sanctions, levies, and embargos.
- Improved Access to Markets: FTAs can provide importing businesses with open access to new markets, allowing them to expand their customer base and increase their revenue.
- Increased Certainty: FTAs can provide businesses with increased certainty and predictability in the trading environment, reducing risks associated with trade policies and regulations changes.
Overall, understanding the free trade agreements that the US has with other countries can provide commercial businesses with valuable information and insights that can help them to optimize their importing strategies. They also improve open access to the US market and allow US companies open access to trade partner markets.
There Are 15 Free Trade Agreements With The US
1. US-Australian Free Trade Agreement (AUSFTA)
This agreement, which has been in effect since 2005, has opened markets for both nations, improved intellectual property protection, and increased investment opportunities by eliminating trade barriers.
2. US-Bahrain Free Trade Agreement (USBFTA)
This agreement between the US and Bahrain was signed and became effective in 2006. It has since enhanced commercial relations, generated export opportunities for both nations, and facilitated increasing trade.
3. Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)
It is an agreement between the US and various countries in Central America, including Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. This agreement was signed in 2004 to promote more robust trade, investments, and stability for all parties.
4. US-Chile Free Trade Agreement (CLFTA)
The relationship between the US and Chile has benefited from the FTA signed by both countries in 2004. This agreement has reduced the barriers, increased trade, and provided more regulatory transparency. Additionally, due to this agreement, all originating goods from the US can enter Chile duty-free.
5. US-Colombia Trade Promotion Agreement (CTPA)
This comprehensive agreement was signed in 2012. It eliminates tariffs and removes barriers to US services, including financial and disciplines relating to Customs, trade facilitation, government procedure, investment and labor, and environmental protection.
6. US-Israel Free Trade Agreement (UIFTA)
The agreement between the US and Israel was signed in 1985 and was the first FTA signed by the US. It continues contributing to and supporting increased trade and investments between Israel and the US.
7. US-Jordan Free Trade Agreement (UJFTA)
This agreement became effective in 2001 and was fully implemented in 2010. Under the agreement, products can enter the US duty-free if manufactured in Jordan, Egypt, the West Bank, and Gaza.
8. US-Korea Free Trade Agreement (KORUS FTA)
The US and Korea signed this agreement in 2012. Under the agreement, almost 80% of US industrial goods became duty-free when entering Korea. This FTA also provides more robust protection of intellectual property rights in Korea and allows for increased trade with minimal barriers.
9. US-Morocco Free Trade Agreement (UMFTA)
The US and Morocco signed an FTA that has been in effect since 2006. This comprehensive agreement provides for improved commercial opportunities for both nations. Additionally, like most countries that have signed FTAs, it has helped reduce trade barriers.
10. US-Oman Free Trade Agreement (OMFTA)
This agreement became effective in 2009 to promote economic improvement and openness. Under this agreement, US exports generated many more opportunities, trade, and investment strengthened in Oman, and stronger intellectual property protection was implemented.
11. US-Panama Trade Promotion Agreement (PATPA)
This agreement was signed by the US and Panama in 2012. Under the agreement, over 87% of US goods exported to Panama became duty-free. This agreement has increased investment opportunities and strengthened the trade relationship between these two countries.
12. US-Peru Trade Promotion Agreement (PTPA)
The US and Peru agreement has been in effect since 2009. This agreement incorporated provisions including the protection of the environment and labor rights. Tariffs for agricultural products from the US coming into Peru have been eliminated, and Peru has opened government procurements to US investors under the signed agreement.
13. US-Singapore Free Trade Agreement (SGFTA)
This agreement was signed in 2004 to help increase trade between the US and Singapore. The US was provided open access to Singapore, one of the world’s biggest markets. The US and Singapore benefit from trading with no barriers to trade and the protection under the agreement, which promotes labor rights and the environment.
14. US-Mexico-Canada Free Trade Agreement (USMCA)
This agreement replaced NAFTA in 2020. This FTA was signed by the US, Mexico, and Canada and has benefited all nations as this agreement aims to liberalize trade and maintain economies' interconnection.
15. US-Japan Digital Trade Agreement (USJTA)
This agreement was signed in 2019 by Robert Lighthizer and Ambassador of Japan, and Shinsuke J. Sugiyama of the United States. This agreement aims to reduce tariffs on specific agricultural and industrial products to strengthen and mutually benefit trade between both nations.
Free Trade Agreements Under Negotiation
Below is a list of free trade agreements in the US that are still under negotiation:
- Indo-Pacific Economic Framework for Prosperity (IPEF)
- Americas Partnership for Economic Prosperity (APEP)
We will keep you updated on the development of these agreements.
If you seek to expand your US business globally, understanding FTAs could benefit your trade and give you the leverage and knowledge you need to succeed. Contact our trade specialists, who will guide you through everything you need to know about successfully trading goods and services to global markets compliantly.