Trade Agreements Mean New Markets for US Exporters and Compliance Requirements for Importers
There are a host of trade issues under discussion in Washington right now, from granting the President “fast-track” authority for trade agreement approval through to bi-lateral and multilateral trade agreements.
Statistics provided by the United States Trade Representative bear out the impact:
According to an analysis supported by the Peterson Institute, a TPP agreement provides global income benefits of an estimated $223 billion per year, by 2025. Real income benefits to the United States are an estimated $77 billion per year. The TPP could generate an estimated $305 billion in additional world exports per year, by 2025, including an additional $123.5 billion in U.S. exports.
Number of Economies: 12 countries in total; United States, Australia, Brunei Darussalam, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
Market Size: 793 million consumers
Combined GDP: $28.1 trillion in 2012 (39.0% of World GDP)
These partnerships, including agreements like the ones that are in place between the United States and Singapore, Israel, South Korea, Australia and other countries, provide market access in both directions for companies seeking to do more business in the partner country.
As an example, there may be a product which traditionally carries a high duty going into that overseas partner’s commerce. The US has very low duty rates on most articles with the exception of food, alcohol and textiles. These agreements lower the duty in the overseas country, giving American manufacturers and exporters the opportunity to have a pricing advantage compared to a competitor in a non-agreement country.
Importers usually discover that the advantage comes in reducing the duty to nearly zero (or zero) percent, which is extremely helpful because many of these countries have higher standards of living and labor costs, so the FCA or Ex-factory price of the goods may initially be more expensive.
Importers must beware, however, because each of these agreements has their own rules governing eligibility, origin determination and documentation and record keeping.
Customs and Border Protection are very keen to pay attention to importers who are claiming preferential status from these countries and it is reasonable for importers to expect requests from CBP to prove they are entitled to this reduced or duty-free treatment.
KFS Customs Services headquartered in our Dallas office files entries on behalf of importers around the United States. We pay close attention to and remind our importers of their responsibility when claiming a preferred duty rate and are there to support them if Customs makes inquiries.
Whether you are looking for new export opportunities as an American manufacturer or new sources for your product as an importer, KFS’s freight forwarding and Customs groups are your best partner to grow and expand your business.