FTA Tariff Tool Demystifies U.S. Trade Agreements for Exporters

April 27, 2011

Justin Hoffmann is an International Economist in the Office of Trade Policy Analysis.

America’s Free Trade Agreement (FTA) partners are attractive markets for many U.S. companies looking to expand into new markets or export for the very first time. Through these agreements, the United States has negotiated the elimination of tariffs, the removal of non-tariff barriers, and secured non-discriminatory treatment for U.S. goods and services.

However, for a new exporter, especially a small exporter, researching the tariff treatment for your good in an FTA partner market can be costly and extremely time-consuming. For example, if you look at the U.S.-Peru Trade Promotion Agreement, the tariff schedules alone for that agreement go on for nearly a thousand pages. If an exporter is lucky enough to find out where his specific product is in the tariff schedule, he will learn, for example, that the tariff charged on his product before the agreement went into effect is 20 percent. Additionally, after some further digging around the agreement text, the exporter would also learn that the tariff on his product “shall be removed in ten equal annual stages beginning on the date this Agreement enters into force, and such goods shall be duty-free, effective January 1 of year ten”.

It is pretty clear that these lengthy documents are crafted by trade negotiators and lawyers and are really not written for U.S. manufacturers who are simply trying to export their goods to new markets.

But now, the new FTA Tariff Tool provides this information instantly and almost effortlessly. The FTA Tariff Tool has three functions: 1) a searchable database to find the tariff treatment of industrial goods covered under the U.S. FTAs; 2) creates market access reports and charts across industrial sectors or product groups; and 3) creates a snapshot of current tariff and trade trends under different U.S. FTAs.

Using this tool, the exporter can instantly search and see the tariffs applied on his product in the FTA partner markets. For example, he can see that the 20 percent tariff Peru used to charge on his good has been reduced to 14 percent under the U.S.-Peru Trade Promotion Agreement. Next year, the tariff will drop to 12 percent and will completely disappear in 2018. The user can search various industrial sectors or product groups and see the amount of trade or products assigned to the various duty-elimination categories as negotiated under the agreement. Users can also  compare the levels of market access across the U.S. FTAs. The user can obtain a snapshot of current tariff rates and trade under the various U.S. FTAs by industrial sector or HS chapter.

This information has never been available before free of charge and in one searchable, consolidated database. Completing this project was a real labor of love, but worth it as it provides valuable information to U.S. industry. The tool can be access from http://www.export.gov/FTA/FTATariffTool/. The website also contains an instructional video, quick start guide and user’s manual.

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