Free Trade Agreements or FTAs are agreements entered into by two or more countries in order to promote fair competition in the marketplace and strengthen the business climate between the parties involved. FTAs can be bi-lateral such as the Mexico - Japan FTA or multi-lateral like NAFTA (which is the US, Canada and Mexico) or EU - Mexico (which is all the member states of the European Union and Mexico). Regardless of the type, FTAs reduce and/or eliminate tariffs on products that are traded between the countries participating in the agreement.

Some of the larger, multi-lateral free trade agreements in existence today include:

• APTA or Asia - Pacific Trade Agreement
• ASEAN or Association of Southeast Asian Nations Free Trade Area
• CARICOM or Caribbean Community
• CEFTA or Central European Free Trade Agreement
• DR - CAFTA or Dominican Republic - Central American Free Trade Agreement
• ECCAS or Economic Community of Central African States
• ECOWAS or Economic Community of West African States
• EFTA or European Free Trade Association
• TPP or Trans-Pacific Strategic Economic Partnership
• NAFTA or North American Free Trade Agreement
• PICTA or Pacific Island Countries Trade Agreement
• SAFTA or South Asia Free Trade Agreement

To determine if a product qualifies for a free trade agreement (FTA), the importer must obtain several pieces of information from various partners within the supply chain. This information from suppliers includes items such as materials used, weight/unit of measurement, and certificates of origin. Once all that information is received from the supplier, the importer must then determine product eligibility based on the many rules of origin surrounding that products Harmonized Schedule number or HS number.

The important thing to remember is that each product will qualify for each applicable FTA in different ways. So to receive the maximum savings opportunities of applicable FTAs, importers will have to qualify that product against each FTA individually.

For more on qualifying for FTAs, read the 5 best practices for determining product eligibility.

Correctly qualifying products for multiple free trade agreements can result in savings opportunities for an organization; however, misqualifying a product may lead to fines from customs authorities or restriction from free trade agreement privileges. By automating FTA qualifications, companies can avoid these problems, saving time and money.

Five main benefits of automating the FTA qualification process:

• Minimize the workload and can more efficiently qualify products for multiple free trade agreements
• Gather and store all required documents in one centralized location
• Eliminate human error when calculating Bills of Materials
• Reduce time to gather, analyze and produce certificates
• Revalidate FTA certification easily

Read more about the benefits of automating FTA qualifications here.

Looking to automate the FTA qualification process for your organization? Integration Point® Free Trade Agreement Software assists companies with automating the time-consuming process of solicitation suppliers, maintaining up-to-date rules of origin, and determining product eligibility.

For more information on Free Trade Agreements, visit the following websites:

Global Trade News on Twitter - Specific to FTAs - www.twibes.com/group/TradeAgreements

European Free Trade Association - www.efta.int/

United States Trade Representative - www.ustr.gov

International Trade Administration - www.trade.gov/fta/index.asp

World Trade Organization (WTO) - www.wto.org/english/tratop_e/region_e/region_e.htm.

US Customs & Border Protection FTA site - www.cbp.gov/xp/cgov/trade/trade_programs/international_agreements/free_trade/

Export.gov - http://export.gov/fta/

US Department of State - www.state.gov/e/eeb/tpp/bta/fta/index.htm

Principles of the Trading System - www.wto.org/english/theWTO_e/whatis_e/tif_e/fact2_e.htm

Preference Programs - www.ustr.gov/trade-topics/trade-development/preference-programs