CE Free Trade Agreements & Preferential Programs Flashcards

What is the primary benefit of a Free Trade Agreement (FTA) for a U.S. exporter?

Answer: Reduced or eliminated tariffs on U.S. goods entering the partner country's market

FTAs primarily lower or eliminate tariff barriers, making U.S. goods more price-competitive in partner markets compared to exports from non-FTA countries.

As of 2026, how many countries does the United States have active Free Trade Agreements with?

Answer: 20 countries

The U.S. has FTAs with 20 countries including Canada, Mexico, Australia, South Korea, and several in Latin America and the Middle East.

What does USMCA stand for and which countries does it cover?

Answer: United States-Mexico-Canada Agreement; it covers the U.S., Mexico, and Canada

USMCA (effective July 2020) is the free trade agreement between the United States, Mexico, and Canada, replacing NAFTA.

What is a 'rule of origin' in the context of FTAs and why is it important for exporters?

Answer: A requirement that goods must meet specific criteria (e.g., sufficient local content) to qualify for preferential tariff rates under an FTA

Rules of origin determine whether a product qualifies for FTA preferential rates by ensuring it was sufficiently produced or contains enough content from the FTA partner countries.

What is the Generalized System of Preferences (GSP) and how does it help U.S. importers?

Answer: A U.S. program that eliminates duties on thousands of products imported from eligible developing countries to promote their economic growth

GSP is a U.S. trade preference program that allows duty-free entry for eligible products from designated developing and least-developed countries to support their export-led growth.

What is a Certificate of Origin and when is it required for FTA preferential tariff treatment?

Answer: A document certifying that goods meet the FTA rules of origin, required by the importing country's customs to grant the preferential duty rate

A Certificate of Origin (or an approved origin declaration on the invoice) is the document that proves goods qualify for FTA preferences and must be provided to the importer to claim the lower tariff.