Trade agreements establish the rules for buying and selling goods and services between countries. They reduce restrictions on trade which can make it easier and cheaper for your company to enter and compete in international markets.
There are many types of trade agreements including free-trade areas (FTAs), multilateral trade agreement (MTA) and bilateral investment treaties. The United States currently has 14 FTAs and 20 bilateral investment treaties with other nations.
FTAs reduce barriers to trade by limiting tariffs and other restrictions that can make it more difficult for businesses to sell their products or services abroad. For example, a country that normally charges a 10% tariff on imported goods will eliminate the tariff for those products that meet the terms of the trade agreement, making them more competitive in the market.
In addition to reducing tariffs, trade agreements often include provisions that address nontariff barriers such as “voluntary” or special import controls and requirements (e.g., quotas, quarantine regulations, special licensing requirements, or specific “health” criteria), which can impose substantial burdens on companies seeking to sell goods in foreign markets. Moreover, many trade agreements contain a “most-favored nation” clause, which requires that the benefits of the trade agreement be extended to all other WTO members, even those who do not have an FTA with the signatory country.
The Office of the USTR is negotiating new and expanded FTAs with key trading partners around the world. These agreements will create jobs and expand opportunities for American companies by lowering costs, improving access to global markets, strengthening security cooperation and building a fairer international economic system.