Significance of Free Trade Agreements for International Goods Shipping

Free trade agreements are agreements between countries, customs unions, or groups of countries aimed at facilitating the trade of goods and services by reducing or eliminating trade barriers such as tariffs and quotas. These agreements are of great significance for international trade of goods as they lower costs and ease access to new markets.

When two countries sign a free trade agreement, it means they open their markets for the trade of goods and services and eliminate trade barriers. This can help reduce the costs of international shipping of goods, as tariffs and fees that would normally apply are reduced or eliminated.

Free trade agreements can also ease access to new markets by enabling trade with countries that previously had no trade relations. This can help boost sales and maximize profits.

Typically, agreements are made between countries for many years and remain relatively stable over time. 

It is important to note that free trade agreements are not only important for large companies but also for small and medium-sized e-commerce companies engaged in international trade. The growth and success of small and medium-sized enterprises can be promoted through lower tax burdens. 

These agreements are therefore of great significance for international trade. 

There are numerous free trade agreements around the world. Here are some examples of the most important agreements. 

1. CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership): A free trade agreement between Australia, Brunei, Chile, Japan, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

2. RCEP (Regional Comprehensive Economic Partnership): A free trade agreement between the ASEAN countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) as well as China, Japan, South Korea, Australia, and New Zealand.

3. EU-MERCOSUR Agreement: 

4. A free trade agreement between the European Union and the countries of the South American MERCOSUR block (Argentina, Brazil, Paraguay, and Uruguay).

5. USMCA (United States-Mexico-Canada Agreement): 

6. A free trade agreement between the USA, Mexico, and Canada.

7. EU-Japan Economic Partnership Agreement: 

8. A free trade agreement between the European Union and Japan.

9. EFTA-MERCOSUR Agreement: 

10. A free trade agreement between the countries of the European Free Trade Association (EFTA) and the countries of the MERCOSUR block.

11. ACFTA: ASEAN-China Free Trade Area: 

12. A free trade agreement between the ASEAN countries and China.

Of course, there are other free trade agreements around the world, but these are some of the most current and relevant.

Here you will find an overview of the current agreements between the EU and other countries: https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/negotiations-and-agreements_en 

Customs Law Perspective

A free trade agreement, from a customs law perspective, results in certain customs barriers and trade obstacles being removed between the involved countries. This facilitates and promotes trade between these countries. 

Specifically, this means that the participating countries impose lower or no tariffs at all on goods exchanged between them. As a result, companies in the participating countries can offer their products at lower prices, thereby enhancing their competitiveness. Additionally, a free trade agreement often leads to a simplification of customs procedures and a reduction in administrative hurdles in cross-border trade.

An important component of free trade agreements is the regulation of the origin of goods and the granting of preferences.

Origin of goods refers to the country where a product was manufactured or last processed. Origin regulations are important because many free trade agreements grant benefits only to products from the participating countries. To take advantage of these benefits, a company must prove that the products comply with the origin rules of the free trade agreement.

This can be demonstrated through various documents, such as origin declarations, manufacturer declarations, or supplier declarations. It is therefore crucial that companies clearly understand which rules and documents are required in each free trade agreement and how they must implement them.

The rules can be viewed here (as of March 2023): https://wup.zoll.de/wup_online/uebersichten.php?id=2&stichtag=17.03.2023 
The granting of preferences also means that the involved countries apply reduced or completely abolished tariff rates to each other. This allows companies to cut costs and improve their competitiveness. However, specific origin rules must also be adhered to for this.

Overall, when using free trade agreements in the customs sector, it is essential to pay close attention to the regulations concerning the origin of goods and the granting of preferences, as well as to carefully prepare and maintain the necessary documents.

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The customs tariff number plays an important role in the origin of goods and preference law because the origin of a good and the associated preferences depend on it.

Free trade agreements exempt certain goods from tariffs if they meet specific conditions, such as originating from one of the involved countries. The customs tariff number aids in determining the origin of a good by providing information on its type and nature.

It is important to know that the customs tariff number can vary from country to country, even for the same goods. Therefore, it is crucial to use the correct customs tariff number to determine the origin of a good and to benefit from the preferences of a free trade agreement.

Thanks to traide AI, you can perform customs classification quickly and effectively and thus use the applicable rules to your advantage. 

We support you with individual requests or mass classification of hundreds of products. New products are effectively and correctly classified, and already existing products are continuously checked with their classification by our AI technology. 

This way, you are legally secured at all times and can optimize your customs processes.

 We would be delighted to show you traide in a brief demo call. If you wish, even directly based on your data.