In international shipping, a common type of treaty between countries is a Free Trade Agreement (FTA). A FTA is an agreement that eliminates trade barriers for exporting and importing and promotes free trade between other countries. The United States currently has a free trade agreement with 20 countries, including Panama, Mexico, Peru, Colombia, Morocco, Singapore, etc. An FTA can be Bilateral between two countries and multilateral between several counties. 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 that countries benefit from FTAs is through increased commerce from other countries. When FTAs eliminate tariffs and trade barriers, trade becomes more attractive due to the potential profit generated. The 20 countries that are in FTAs with the U.S. purchase nearly half of the U. S’s exports yearly. The U. S’s largest trading partner, Canada, imported 357 billion dollars’ worth of goods from the U.S. in 2021. Countries that are considered developing may benefit from having FTA agreements with the U.S. For example, Peru has seen an increase in trade and foreign investment due to their agreement with the U.S.
The increase in foreign investment and commerce has lowered poverty levels and created jobs in Peru. Peru has also been able to compete better with neighboring countries due to its FTA. Other countries have benefited similarly by having FTAs with the U.S. Many in the U.S. believe that free trade means that domestic jobs are lost to manufacturers overseas making the same product. However, many economists see free trade as potential growth and an opportunity for a country to open itself to another.
Shippers and companies that want to export their goods and do business internationally also have many advantages with FTAs. Similar to how countries can make a profit, individuals looking to sell their products may increase their income. With tariffs gone, importing goods becomes cheaper for the shipper. Fewer trade barriers also help stabilize the trading environment because of the ease for shippers to move their goods. The FTAs also allow U.S. shippers to contribute to creating product standards in the associate country.
Starting Your Shipping Journey
Are you a business or an individual that wants to begin making shipments globally? While FTAs are beneficial, there are still many things to be aware of 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.
