Trade Agreement Rules

Issues and Challenges

Free trade agreements (FTAs) can be a source of significant cost savings for importers. However, many companies forego these benefits because of the effort to manually administer them.

The first step to leveraging FTAs is to determine which trade agreements a company may qualify for based on the products being shipped from certain countries, to certain countries. This requires a company to compare the product classifications for the goods being shipped with the associated rules of origin for each trade agreement. Today, there are over 500 free trade agreements worldwide.

For companies with assembled goods, this process known as 'qualification' can be particularly difficult. Complex bills of material (BOM) must be analyzed to ensure that a requisite percentage of the component parts that comprise the finished good have been manufactured in qualifying countries.

Once a company has identified the FTAs for which they are eligible, they must establish the appropriate procedures and documentation to administer them. This involves soliciting and receiving certificates of origin for the finished goods or component parts from their suppliers, proving that the goods were manufactured in qualifying countries. It also includes the ability to track shipments, reconcile and apply the reduced duty rates and prove eligibility in the case of an audit.

Without automation, FTA identification, qualification, vendor solicitation and administration can be very arduous, which is why so many companies miss out on the significant duty savings afforded by free trade agreements.

How Amber Road Can Help

Maximizing FTA cost benefits is one of the fastest and easiest ways to squeeze significant financial returns out of a company's global supply chain when done in an automated fashion. A dollar, yen, pound or euro saved in duties goes straight to a company's bottom line, which is what makes these FTA programs so appealing.

FTA identification and qualification is powered by our Global Knowledge^® database of global trade content. Global Knowledge^® contains the rules of origin, product classifications and duties and taxes for the major preferential trade programs.

With FTA information updated constantly by a network of In-Country Content Providers (ICCP) and trade specialists, Amber Road ensures companies can accurately determine which potential trade agreements are available for making a preferential claim. In today's global environment, the resulting FTA duty and tax savings can easily reach millions of dollars in savings annually.