Free Trade Agreement (FTA)

What Is a Free Trade Agreement (FTA)?

A Free Trade Agreement (FTA) is a treaty between two or more countries that reduces or eliminates tariffs and other trade barriers on goods traded between them.

How Does an FTA Work?

Member countries agree to preferential tariff rates, often reduced to zero, on qualifying goods traded between them, along with other provisions covering rules of origin, intellectual property, and regulatory cooperation. To qualify for FTA benefits, goods generally must meet specific rules of origin requirements proving they were substantially produced within the member countries, not simply passed through.

Why FTAs Matter

FTAs can significantly reduce landed costs for qualifying goods, but claiming the benefit requires proper documentation and rules-of-origin compliance, errors here are a common reason companies miss out on tariff savings they're actually entitled to. Understanding which FTAs apply to a given trade lane, and ensuring products qualify under the specific rules of origin, is essential to capturing available savings.