Free Trade Agreement (FTA)

A free trade agreement (FTA) is a treaty between two or more countries that removes or reduces tariffs and other barriers on goods traded between them. In shipping, "FTA" on a booking or invoice means the importer intends to claim the agreement's preferential duty rate at customs, which needs goods that meet the agreement's rules of origin and a certification of origin to prove it.

US free trade agreements in force

The United States has 14 comprehensive free trade agreements in force with 20 countries: USMCA (Canada and Mexico), CAFTA-DR (Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua) and bilateral agreements with Australia, Bahrain, Chile, Colombia, Israel, Jordan, Korea, Morocco, Oman, Panama, Peru and Singapore, plus a narrower critical-minerals agreement with Japan. India, China, Vietnam, Thailand, Indonesia, Bangladesh and the European Union are not FTA partners. Goods from those origins pay the general rate plus whatever additional tariffs are in force.

How the claim is made at entry

• Rules of origin: the good must be wholly obtained in the partner country, produced entirely from originating materials, or meet the product-specific rule for its tariff line, usually a tariff shift (the non-originating inputs are classified under a different heading from the finished good) or a regional value content threshold. USMCA labels these preference criteria A to D on the certification
• Certification of origin: for USMCA any format is acceptable provided it carries the nine minimum data elements in Annex 5-A: the certifier, exporter, producer and importer, a description and six-digit HS classification of the good, the origin criterion, the blanket period if it covers up to 12 months of shipments, and a signed certification statement. Older agreements use a certificate of origin or an importer declaration
• The entry: the broker reports the agreement's special program indicator on the entry line and the preferential rate from the HTS "Special" column replaces the general rate
• Late paperwork: for USMCA and several other agreements a claim can still be made after entry under 19 U.S.C. 1520(d), within one year of importation, with the certification attached

What an FTA claim does not remove

The preference replaces only the Column 1 general rate. Trade-remedy duties assessed under Chapter 99 of the tariff schedule are charged on top: CBP's guidance is that Section 232 duties "may not be waived due to a Free Trade Agreement", Section 301 duties apply in addition to the normal rate, and antidumping and countervailing duties are assessed regardless of a preference claim. Some actions carve out USMCA-qualifying goods and others do not, so the Chapter 99 note for each action decides, and the current list is on the tariff updates tracker.

What to keep on file

CBP can verify a claim after entry. A USMCA importer must keep the certification and every record showing how the good qualifies, including transit and transshipment documents, for at least five years from the date of importation (19 CFR 182.15), and the exporter or producer that signed the certification should hold the bill of materials, supplier declarations and cost workings behind the origin criterion. A verification you cannot answer means repaying the duty, and can bring penalties.

Check your duty and your claim

Enter the HTS code and origin in Airlift's tariff simulator to see the general rate and the trade-remedy layers, or start from a product description in the HTS code finder. If your origin is an FTA partner, ask us to confirm the preferential rate and the certification you need; Airlift's customs clearance team coordinates the origin paperwork with its licensed broker network so the claim is made correctly at the port of entry.