The 2022 edition had about 350 amendments, including specific provisions related to the classification of electrical and electronic waste (e-waste), as well as new provisions for novel nicotine-based products and unmanned aerial vehicles (UAVs), more commonly known as drones. The World Customs Organization updates the Harmonized System every five years to account for new products and circumstances, and the latest update took effect January 1, 2022. They also identify products that qualify for the preferential rates provided by treaties. HS codes are essential to the import/export process because they’re linked to duty and tariff rates in each country. The Harmonized System is a global product classification system, and HS codes are essentially a “ universal economic language and code for goods.” They enable customs agents to quickly identify imports and exports as well as ensure they’re assigned the appropriate customs duty and import tax. importers throughout the supply chain, from manufacturers to marketplaces and retailers.Įvery product shipped across an international border must be assigned a Harmonized System code (or HS code). and the EU have overlapping networks of FTAs, they have no FTA with each other.Īny and all of the treaties listed above could benefit U.S. Singapore: The Singapore Free Trade AgreementĪlthough the U.S. Panama: The United States-Panama Free Trade Promotion Agreement Nicaragua: The Dominican Republic-Central America FTA (CAFTA-DR) Morocco: The Morocco Free Trade Agreement Mexico: The United States-Mexico-Canada Agreement (USMCA) Korea: The U.S.-Korea Free Trade Agreement Honduras: The Dominican Republic-Central America FTA (CAFTA-DR) Guatemala: The Dominican Republic-Central America FTA (CAFTA-DR) currently has 14 preferential treaties with 20 countries:Īustralia: The Australia Free Trade Agreementīahrain: The Bahrain Free Trade AgreementĬanada: The United States-Mexico-Canada Agreement (USMCA)Ĭolombia: The United States-Colombia Trade Promotion AgreementĬosta Rica: The Dominican Republic-Central America FTA (CAFTA-DR)ĭominican Republic: The Dominican Republic-Central America FTA (CAFTA-DR)Įl Salvador: The Dominican Republic-Central America FTA (CAFTA-DR) Businesses that trade in qualifying products will benefit most from claiming preferential treatment. The International Trade Administration’s Rules of Origin - Substantial Transformation offers more details.įurthermore, different treaties reduce or eliminate tariff rates for different products. or FTA partner territory:įor U.S.-based exporters, the goods must originate in the U.S.įor U.S.-based importers, the goods must originate in a partner country For example, reduced rates apply only to products that originate (i.e., products that are made “or substantially transformed”) in the U.S. trade preference programs.” Not all products qualify for preferential treatment. The biggest benefit FTAs provide to a company is the preferential tariff treatment - the ability to move certain products into or out of partner countries with reduced or zero tariffs (aka, duties).Įvery treaty has Preferential Rules of Origin (ROOs) that determine whether “products are eligible for duty-free or reduced duties under U.S. For the most part, the benefits don’t come automatically: Businesses must apply for treaty status. Though treaties are between countries, they can benefit businesses that opt to take advantage of them. interests competing abroad, and enhance the rule of law” in the FTA partner countries. engages in trade agreements primarily “to reduce barriers to U.S. Duty rates obtained through an FTA can be even lower than those offered by MFN status.Īccording to the International Trade Administration, the U.S. The WTO defines most-favored-nation status as “the principle of treating trading partners equally”: If one country grants “more favorable treatment” to another country, “it must immediately and unconditionally give the same treatment to imports from all signatories” of the treaty. Preferential treaties also typically include protections for intellectual property rights and investors.įTAs offer privileges above and beyond those enjoyed by the World Trade Organization’s most-favored-nation (MFN) status, which all 164 members of the World Trade Organization (WTO) have. Commonly referred to as a free trade agreement (FTA), a preferential treaty is an agreement between two or more countries that establishes advantageous trading practices for certain goods or services originating from participating countries.
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