With over 375 preferential trade agreements now in place across the globe, the focus on reducing existing trade barriers, including lowered tariffs and the creation of more stable trading regions, has never been higher. Companies can take the steps necessary to benefit from the preferential duty rates and lowered trade barriers that come with free trade agreements (FTA).

The challenge, though, is that in order to leverage any trade agreement, let alone multiple trade agreements, companies are required to stay current on free trade agreement rules of origin, research each product classification number and qualification status, as well as obtain product information and preferential certificates of origin from suppliers. These are time-consuming and daunting tasks when done manually.

For those companies looking for a better way to manage the FTAs they are utilizing today, considering expanding the number of FTAs managed, or wanting to implement an automated solution to alleviate the administrative burden that comes with managing FTAs, the Integration Point Free Trade Agreement Management solution significantly reduces the time needed to qualify goods for any free trade agreement.

Integration Point Free Trade Agreement Management allows importers to significantly reduce the time needed to qualify goods for a free trade agreement by automating the most resource intensive steps, including supplier solicitation, staying current with preferential rules of origin, and Bill of Material (BOM) analysis.

Products must meet rules of origin requirements in order to receive preferential treatment. Performing the necessary calculations to determine product eligibility for any global FTA is performed within Integration Point Free Trade Agreement Management during a BOM analysis. Once eligibility status is determined, the BOM is certified as passing or failing against all FTA(s) managed in the solution with the results automatically included in an audit trail in the event supporting documentation is needed to support a claim.

Reap the benefits of managing multiple FTAs on a global basis by automating the solicitation, qualification and certification generation process, without allocating additional staff using Integration Point Free Trade Agreement Management.

Using technology to help make the hard decisions

With an automated solution like FTA Management, combined with Integration Point Tariff Analyzer, a company considering changing sourcing locations can quickly determine if free trade agreements are available for any new sourcing location under consideration, and if so, what the preferential duty rate is if the product qualifies.

If a sourcing location is selected where a free trade agreement is available, automating the management of the free trade agreement greatly enhances a company’s ability to qualify a higher percentage of eligible products than if managed manually. The benefit is more products qualified, lower duty paid, and greater total cost savings gained.

Having an automated solution can help not only provide the information needed to select sourcing locations wisely, but can also assist a company to realize those projected savings by ensuring available free trade agreements are leveraged, products are classified correctly, and visibility into regulatory requirements for moving a product across international borders is readily available.

By implementing Integration Point Global Classification along with Integration Point FTA Management and Global Trade Content, companies receive up-to-date classification data, tariff preferences, and current FTA rules of origin in one web-based platform.

What is a Free Trade Agreement (FTA)?

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 more common free trade agreements in existence today include:

How Does A Product Qualify for a FTA?

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.

According to the World Trade Organization (WTO), 'the surge in Regional Trade Agreements (RTAs) has continued unabated since the early 1990s.' As of February 2010, approximately 462 RTAs (also known as free trade agreements or FTA) have been notified to the General Agreement on Tariffs & Trade (GATT)/WTO with over 300 agreements now in force. The reason for this dramatic growth is quite simple — trade agreements are eliminating import taxes, lowering obstacles to trade, opening up access to markets, and strengthening trade rules. Now is the time for companies around the globe to take advantage for what these trade agreements have to offer, and to that, they need to invest in an automated solution instead of relying on manual processes for free trade agreement management.

For companies who want to make the leap from the time-consuming, manually intensive exercise that prevents most companies from fully leveraging free trade agreements, Integration Point has a solution available to easily manage the entire lifecycle of FTAs. With our end-to-end solution to FTA Management, companies get the most comprehensive solution for automating every step of FTA qualifications for any FTA program around the world.

The FTA lifecycle starts with making strategic sourcing decisions that lower landed cost, proceeds to determining eligibility, and ends with post-entry validation of FTA claims. To effectively manage the entire FTA lifecycle, companies need to have an integrated solution in place that automates every key phase of managing FTAs.

Integration Point FTA Lifecycle Management

As a web-based solution, Integration Point FTA Management allows importers to significantly reduce the time needed to qualify products under a free trade agreement through the automation of the entire FTA lifecycle. From soliciting suppliers for a certificate of origin to determining product eligibility based on the rules of origin, from generating certificates of origin to verifying and validating if eligible products were claimed at the time of entry, Integration Point FTA Management covers it all.

In addition, FTA Management stores supplier provided supporting documentation, Bill of Material (BOM) analysis results, and generated Certificates of Origin in a central location to support paperless record keeping.

Importers and exporters have the option of using the entire FTA Management solution or only using those individual software applications that deliver key capabilities targeted at current needs. Starting with the Free Trade Agreement software, which is the core component of the FTA Management integrated solution, users can implement one application and then expand to include the entire suite when the need arises or budget is available.

By leveraging the Integration Point FTA Management solution, companies can advantage of an integrated solution designed around managing every aspect of an FTA. Whether it is just managing solicitation and analysis, or expanding to include a shared parts repository, or post-entry auditing including reconciliation, Integration Point has a solution that fits your needs.

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