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How Free Trade Can Help Grow Your Business

Vol. 23 Issue 6

Post Categories: Expansion, Exporting

Are you looking to start exporting or expand into a new market? Not sure where to go next? Countries that have free trade agreements with the United States can be a great starting point when searching for new opportunities.

The most well-known agreement is the North American Free Trade Agreement, or NAFTA, which includes the United States, Mexico and Canada. But did you know the United States currently has 14 free trade agreements that include 20 different countries?

Fifty-eight percent of companies are only exporting their products to one country. For your company to grow, it’s crucial to locate new markets that offer low barriers to entry and a sizable consumer population. Free trade agreements provide a favorable environment for businesses to reach more markets and remain competitive with other firms.

How Free Trade Agreements Help

Many people are familiar with the advantages that free trade agreements offer between partner nations. The most recognized benefit is the reduction or elimination of tariffs, which can give your goods a significant price advantage over non-FTA firms. But what is required of your business to take advantage of these benefits?

There are certain specifications, or rules of origin, a product must meet. In general, a certain percentage of the product must originate in the United States. If your product is 100 percent made in the United States, it automatically qualifies.

Each agreement requires different supporting documents to verify a product’s origin. The U.S. Commercial Service office in Kansas City assists firms with understanding the rules of origin and other free trade requirements.

In addition to reduced tariff rates, FTAs offer companies numerous other benefits. If you have exported in the past, you know that getting a product through customs can be cumbersome at best. Free trade agreements help create an improved customs process, reducing headaches for the exporting company and its international partner. One way this is accomplished is through the harmonizing of product standard requirements.

Another factor that is on everyone’s mind when exporting is protecting intellectual property, and free trade agreements offer expanded protection for copyrights, trademarks, trade secrets and patents. Each member nation must agree to have the proper enforcement procedures in place. Countries must also agree to practice fair treatment in awarding such rights to U.S. companies. These measures ensure that intellectual property concerns do not create unnecessary barriers to trade.

Look South

Earlier this year, the U.S. Department of Commerce announced the “Look South” initiative. Its goal is to encourage businesses to consider Latin America when searching for their next export destination. The U.S. has separate free trade agreements with Chile, Colombia, Mexico, Panama and Peru. The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) covers Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. All of these countries have rapidly growing economies due to an expanding middle class.

With “Look South,” federal agencies are working to make small and medium-size businesses more aware of the emerging Latin American markets. The agencies are increasing their export financing activities and connecting U.S. companies with business opportunities in the region. For more information, visit or contact the U.S. Commercial Service’s office in Kansas City.


Regina Heise is the director of the U.S. Commercial Service office in Kansas City.

Thomas King is an intern for the local office.

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