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If you're shipping to or from the United States, you know that free trade agreements are an important factor to consider when doing business across borders.
According to the OEC, the United States has the largest national economy in the world and ranks number one in total exports and second in total imports. The US economy is driven by innovation and productivity, and it’s also one of the most open economies in the world. The US engages in free trade agreements with many countries, and the list is constantly growing.
However, with so many FTAs in place, it can be difficult to keep track of them all.
To help, we've compiled a list of FTAs in the United States so that you can easily determine which FTA applies to your international shipments. This list can help you stay on top of changing regulations and take advantage of the many benefits that free trade agreements offer.
We hope this US FTA list provides you with a better understanding of the FTAs in place and helps make international trade easier for your business. First, let's quickly define free trade agreements.
What Is a Free Trade Agreement?
A free trade agreement (FTA) is an agreement between two or more countries that allows goods and services to move freely between borders without tariffs or other restrictions imposed by either party. These agreements are designed to promote economic growth and development by increasing the flow of international trade.
FTAs provide preferential access to goods and services, allowing companies to move their goods more efficiently with lower costs. In addition to reduced tariffs on imported goods, FTAs also provide businesses with access to new markets that may not have been available before the agreement was signed.
By expanding into these new markets, your business can increase its revenue while also diversifying its customer base. The more diverse your customer base is, the more resilient your business will be against market fluctuations and economic downturns.
A List of US FTAs
The intricacies of the US export and import regulations can be confusing, so having a comprehensive FTA list is essential for businesses looking to take advantage of free trade agreements.
The Office of the United States Trade Representative (USTR) leads the country's trade negotiation efforts. This includes working closely with domestic partners, such as the International Trade Administration (ITA), and international organizations, such as the World Trade Organization (WTO). The USTR's goal is to secure fair and reciprocal trading relationships for the United States by engaging in bilateral and multilateral trade negotiations, as well as Promotion and Protection Agreement (PPA) negotiations.
The United States currently has 14 FTAs in place with 20 countries. In addition to these 14 FTAs, several more agreements have been signed but have yet to be ratified by Congress or implemented into law. These pending FTAs could provide even more opportunities for businesses in the shipping industry that are looking to expand their operations overseas.
Australia-United States FTA (AUSFTA)
The AUSFTA has increased trade between the two countries by almost double since it was enacted in 2005. The agreement eliminated tariffs on more than 99% of goods traded between the two countries, making it easier and more cost-effective for businesses to move goods across their borders.
Partner countries: United States, Australia
United States-Bahrain FTA (BHFTA)
Since the Bahrain Free Trade Agreement (BFTA) went into effect in 2006, tariffs on 100% of products traded between the U.S. and Bahrain have been reduced or eliminated.
As a result, U.S. farmers have seen a significant increase in agricultural exports to Bahrain. In addition, Bahrain has opened its services market wider than any previous FTA partner, creating new opportunities for U.S. companies. The BFTA has benefited both countries, and it is a testament to the strong relationship between the U.S. and Bahrain.
Partner countries: United States, Bahrain
Dominican Republic-Central America FTA (CAFTA-DR)
Since taking effect in 2009, the Dominican Republic-Central America FTA (CAFTA-DR) has been an important tool in promoting prosperity and stability throughout the region. The agreement has helped to increase trade and investment ties between the United States and their Central American neighbors, as well as fostering economic growth and development.
The CAFTA-DR has also been instrumental in helping to reduce poverty and inequality throughout the region. In addition, the agreement has helped to improve the business environment by promoting transparency and reducing corruption. As a result, the CAFTA-DR has had a positive impact on the lives of many people in the region.
Partner Countries: United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic
United States-Chile Free Trade Agreement (CLFTA)
The CLFTA entered into force in 2004 and has been a success story for both countries. As of 2015, all goods originating from the United States enter Chile duty-free. This has resulted in increased exports from the United States to Chile and vice versa. The agreement also includes provisions for the protection of intellectual property rights and investment, which have been beneficial for both countries.
Partner Countries: United States, Chile
United States-Colombia Trade Promotion Agreement (COTPA)
The United States—Colombia Trade Promotion Agreement (COTPA) entered into force on May 15, 2012. The TPA is a comprehensive free trade agreement that eliminates tariffs and removes barriers to US services, investment, and government procurement in Colombia.
The COTPA also supports the development of a more predictable, transparent, and competitive business environment in Colombia. It underscores the US commitment to promoting economic growth and opportunity in Colombia, and it is expected to create jobs in both countries.
Partner Countries: United States, Colombia
United States-Israel Free Trade Agreement (ILFTA)
The first FTA the United States entered into was the United States-Israel Free Trade Agreement (ILFTA), which entered into force in 1985. Under the ILFFTA, the US and Israel eliminated tariffs on many goods traded between them. The FTA also includes provisions related to intellectual property rights, services, investment, financial services, government procurement, dispute settlement procedures, and other areas of economic cooperation.
Partner Countries: United States, Israel
United States-Jordan Free Trade Agreement (JOFTA)
The Jordan Free Trade Agreement (JOFTA) was a game-changer for the small Middle Eastern nation. When it went into effect on December 17, 2001, nearly all Jordanian goods became eligible for duty-free entry into the United States. The Agreement was a major coup for Jordan, as it made the nation a more attractive destination for foreign investment.
JOFTA specifically made Jordan an appealing location for apparel manufacturing companies such as Walmart, Target, and Hanes were interested in the idea of being able to sell their products without tariffs, so they set up factories in Jordan.
Partner Countries: United States, Jordan
U.S. - Korea Free Trade Agreement (KORUS FTA)
The Korea-U.S. Free Trade Agreement (KORUS FTA) is a trade agreement between the United States and South Korea that came into effect in 2012. The KORUS FTA has been credited with increasing trade between the two countries, as well as promoting investment and economic growth. In addition, the KORUS FTA has helped to increase cooperation on various issues, including environmental protection and labor standards.
Although the KORUS FTA has been beneficial for both the United States and South Korea, there have been some challenges associated with its implementation. These challenges include disagreements over automobile emissions standards and concerns about the agreement's impact on the US job market. Despite these challenges, the KORUS FTA remains an important part of the economic relationship between the United States and South Korea.
Partner Countries: United States, Korea
United States-Morocco FTA (MAFTA)
The United States–Morocco FTA (MAFTA) was implemented in 2006 and is one of the most comprehensive FTA the US has signed with a majority-Muslim nation. Under MAFTA, both countries have eliminated tariffs on all goods traded between them, with the exception of sensitive agricultural products.
The FTA also provides for increased investment protection and market access, particularly in the areas of services and government procurement. Moreover, MAFTA also establishes a dispute resolution mechanism that allows either country to resolve any FTA-related disputes.
Partner Countries: United States, Morocco
United States-Oman FTA (OMFTA)
The United States-Oman Free Trade Agreement (OMFTA) went into effect in 2009, creating a more level playing field for American companies doing business in Oman and increasing market access for US exports. The Agreement provides Oman with duty-free treatment for 97 percent of US consumer and industrial products and solidifies Oman's commitment to reforming its trade practices and opening its markets to foreign competition.
Under the Agreement, both countries have committed to protecting intellectual property rights, ensuring a fair and transparent investment climate, and providing adequate and effective environmental protections.
Partner Countries: United States, Oman
United States- Panama Trade Promotion Agreement (PAPTA)
The United States-Panama Trade Promotion Agreement (PATPA) is a bilateral trade agreement between that entered into force on October 31, 2012. The agreement eliminates tariffs on most goods traded between the two countries and establishes trade rules designed to level the playing field for US businesses and workers competing in Panama's market.
Moreover, the PATPA includes a comprehensive chapter on labor rights, which obligates both parties to enforce their respective labor laws and establish procedures for enforcing those laws. The FTA also facilitates cooperation between the two countries in areas such as environmental protection, intellectual property rights protection, and technical assistance.
Partner Countries: United States, Panama
United States-Peru Free Trade Agreement (PTPA)
The United States-Peru FTA (PTPA) is a free trade agreement that entered into force in 2009. The FTA eliminates tariffs on most goods traded between the two countries and creates rules designed to ensure that US businesses have access to Peru's markets.
Since the agreement was implemented, trade between the United States and Peru has increased steadily. PTPA has also been credited with helping to spur economic growth and reduce poverty in Peru. However, the agreement has been criticized by some for not doing enough to protect workers' rights and the environment, but it remains a vital tool for promoting stability and prosperity in the region.
Partner Countries: United States, Peru
United States-Singapore FTA (SGFTA)
The United States-Singapore Free Trade Agreement (SGFTA) is a bilateral trade agreement between the United States and Singapore. The SGFTA was signed on May 6, 2003, and entered into force on January 1, 2004. The SGFTA is the first free trade agreement between the United States and an Asian nation.
With Singapore being a key player in the global economy, the SGFTA created an open and transparent trading environment that has helped to expand trade and investment flows between the two countries.
Partner Countries: United States, Singapore
United States-Mexico-Canada Agreement (USMCA)
The latest addition to the FTA list is the United States-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA). The USMCA was signed on November 30, 2018, and went into effect on July 1, 2020.
The USMCA’s core provisions are designed to increase regional economic integration and support the creation and retention of jobs in North America while updating NAFTA to reflect today’s sounder environmental and safety standards. It includes new rules governing digital trade, labor, and environmental protections to address 21st-century challenges.
Partner Countries: United States, Mexico, Canada
Use US FTAs to Your Advantage
Free trade is an essential part of our global economy, and understanding how it works can be critical for small businesses looking to expand their operations overseas.
Whether you’re importing to or exporting from the US, understanding how free trade agreements work can be key for any business looking to take advantage of the benefits offered by free trade. With this information in hand, you will be well-equipped to make informed decisions about your business’s international expansion plans going forward.
US FTAs FAQ
Which documents do you need to use US FTA?
You should consult with a qualified customs broker or an experienced international trade attorney to determine the specific documents you need for your particular situation. Generally, you will need either a Certificate of Origin (CoO) or a Free Trade Agreement Certificate of Origin (FTA CoO) to claim preferential tariff treatment under the FTA.
Do US FTAs provide special benefits for exporters?
Yes, they do. In addition to reducing tariffs on exports to FTA partner countries, US free trade agreements also provide additional benefits such as reducing trade barriers such as customs clearance and documentation requirements. FTA partner countries may also have additional benefits, such as preferential access to government procurement contracts or protection from non-tariff trade barriers.
Are US FTAs mutually beneficial?
Yes, free trade agreements are designed to mutually benefit the parties involved. FTA partners benefit from increased market access and lower tariffs, while the US also receives increased market access and improved export opportunities. Additionally, FTA partner countries may benefit from improved economic development through increased foreign direct investment.