Free trade agreements
A free trade agreement (FTA) is a treaty between two or more countries that grants preferential — often zero — duty rates on qualifying goods. Understanding which agreements cover your trade lane can substantially reduce landed cost.
What FTAs do
Under a free trade agreement, goods that satisfy the agreement's rules of origin are eligible for a preferential tariff rate — typically reduced to zero, or to a schedule that phases to zero over a transition period. Without FTA preference, goods face the country's most-favoured-nation (MFN) rate, which is the standard applied to all WTO members.
Preferential rates apply per tariff line (HS subheading), so the same agreement may give zero duty on one product while leaving another partially dutiable. Always verify the rate at the specific six- or ten-digit HS code level using the destination country's tariff schedule.
FTAs also commonly include provisions on customs procedures, intellectual property, digital trade, investment, and government procurement — but the immediate commercial benefit for most importers is the preferential duty rate.
Key global agreements
| Agreement | Members | In force | Key sectors |
|---|---|---|---|
| USMCA | United States, Canada, Mexico | 2020 | Automotive, agriculture, dairy, digital trade |
| RCEP | 15 Asia-Pacific nations (ASEAN + China, Japan, South Korea, Australia, New Zealand) | 2022 | Manufactured goods, electronics, textiles, agriculture |
| CPTPP | 11 Pacific Rim nations (Canada, Australia, Japan, Singapore, Vietnam, others) | 2018 | Agriculture, financial services, IP, government procurement |
| EU–UK TCA | European Union, United Kingdom | 2021 | Goods trade (zero tariff on qualifying goods), fisheries, services |
| EU–Japan EPA | European Union, Japan | 2019 | Automotive, agriculture (cheese, wine), electronics |
| EU–Vietnam FTA | European Union, Vietnam | 2020 | Electronics, textiles, footwear, seafood, rice |
| KORUS | United States, South Korea | 2012 | Automotive, electronics, financial services, agriculture |
| ChAFTA | China, Australia | 2015 | Minerals, agriculture (beef, wine, dairy), services |
| AGOA | United States, sub-Saharan African countries (up to 49) | 2000 | Textiles, apparel, agricultural products, manufactured goods |
| EFTA agreements | Switzerland, Norway, Iceland, Liechtenstein + 40 partner countries | Various | Industrial goods, processed agricultural products, fish |
How to check if your goods qualify
FTA preference is not automatic. To claim a preferential rate, goods must satisfy the agreement's rules of origin — the criteria that determine where goods are considered to "originate" for customs purposes. An FTA between the importing and exporting country is a necessary but not sufficient condition: the goods themselves must meet the origin test.
Common origin criteria include wholly obtained status, a specified change of tariff heading, or a regional value content (RVC) threshold. Rules differ by product and by agreement — a textile may require a yarn-forward rule under USMCA but only a two-step transformation under CPTPP.
Most national customs authorities publish tariff tools that show the preferential rate and the applicable rule of origin for a given HS code and trade partner. Examples include the EU's TARIC database, the US International Trade Commission tariff portal, and the UK Global Tariff tool.
Certificate of origin requirements
To claim preferential duty treatment, the importer must hold proof of origin at the time of import. Requirements vary by agreement:
- Issued certificate: A formal document issued by an authorized body in the exporting country — for example, a EUR.1 movement certificate for EU preferential agreements or a CO Form A under the Generalised System of Preferences (GSP).
- Exporter declaration: Some agreements allow a registered or approved exporter to self-declare origin on the commercial invoice. USMCA allows this for all exporters; the EU–UK TCA allows it for shipments above EUR 6,000 only if the exporter holds a REX registration.
- Importer self-certification: USMCA additionally allows the importer to certify origin based on documentation provided by the exporter.
Incorrect or unsupported origin claims expose the importer to back-duty assessments, interest, and potential penalties. Retain supporting documentation — bills of materials, supplier declarations, manufacturing records — for a minimum of five years.
See Rules of Origin for the detailed criteria that determine whether goods qualify for FTA preference, and use the Duty Calculator to compare MFN and preferential rates for a specific HS code and trade corridor.