In international shipping, a common type of treaty between countries is a Free Trade Agreement (FTA). An FTA is an agreement that eliminates trade barriers for exporting and importing and promotes free trade between other countries. The United States currently has free trade agreements with 20 countries, including Panama, Mexico, Peru, Colombia, Morocco, and Singapore. An FTA can be Bilateral between two countries and multilateral between several countries. The U.S is currently part of 12 bilateral and 2 Multilateral FTAs, including the DR-CAFTA and the USMCA (formerly NAFTA). Shippers and countries benefit tremendously from the agreements, which we will explain in this article.

How do the U.S. and other countries benefit from FTAs?

The primary way countries benefit from FTAs is through increased trade with other countries. When FTAs eliminate tariffs and trade barriers, trade becomes more attractive due to the potential profits it generates. The 20 countries that are in FTAs with the U.S. purchase nearly half of the U.S.’s exports each year. The U.S.’s largest trading partner, Canada, imported $357 billion in goods from the U.S. in 2021. Developing countries may benefit from FTA agreements with the U.S. For example, Peru has seen an increase in trade and foreign investment following its agreement with the U.S.

The increase in foreign investment and trade has reduced poverty and created jobs in Peru. Peru has also been able to compete more effectively with neighboring countries thanks to its FTA. Other countries have benefited similarly through FTAs with the U.S. Many in the U.S. believe that free trade means domestic jobs are lost to manufacturers overseas that make the same products. However, many economists see free trade as a potential for growth and an opportunity for a country to open itself to others.

Shippers and companies that want to export their goods and do business internationally also benefit from many advantages under FTAs. As countries can make a profit, individuals looking to sell their products can increase their income. With tariffs gone, importing goods becomes cheaper for the shipper. Fewer trade barriers also help stabilize the trading environment by making it easier for shippers to move their goods. The FTAs also allow U.S. shippers to contribute to the development of product standards in the associated countries.

Starting Your Shipping Journey

Are you a business or an individual looking to start shipping globally? While FTAs are beneficial, there are still many factors to consider when importing and exporting cargo. Shipping goods involves different parts of a supply chain coming together to achieve a goal. If one part goes wrong, the whole journey may be affected, and A1WWL understands this. We are prepared to go above and beyond to coordinate your freight transportation. Contact A1 Worldwide Logistics at 305-821-8995 for a quote to begin your shipping journey. Whether your country has an FTA or not, we help you find the best rate to move your cargo internationally.