1 CHAPTER V FREE TRADE AGREEMENTS European Free Trade Agreements & Common Market –European Free...

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CHAPTER V CHAPTER V FREE TRADE FREE TRADE AGREEMENTS AGREEMENTS

European Free Trade Agreements & Common Market– European Free Trade Association– Central European Free Trade

Agreement– European Union

United States Free Trade Agreements

Copyright(c) 2012 Dr. Chase C. Rhee

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Differences between Free Trade Differences between Free Trade Area and Common MarketArea and Common Market

In Free Trade AreaIn Free Trade Area Free movement of product, service, & Free movement of product, service, &

capitalcapital No free movement of laborNo free movement of labor Separate external tariff & trade policySeparate external tariff & trade policy Separate fiscal & economic policy Separate fiscal & economic policy

In Common MarketIn Common Market Free movement of product, service, & Free movement of product, service, &

capitalcapital Free movement of laborFree movement of labor Common external tariff & trade policyCommon external tariff & trade policy Coordinated fiscal or economic policyCoordinated fiscal or economic policy


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European Free Trade Association (EFTA)

The oldest free trade organizationThe oldest free trade organization Stockholm Convention in 1960Stockholm Convention in 1960 Many members left EFTA to join Many members left EFTA to join

European Community (EC), which European Community (EC), which later became European Union (EU)later became European Union (EU)

Current members: Iceland, Norway, Current members: Iceland, Norway, Switzerland, and LiechtensteinSwitzerland, and Liechtenstein

EFTA & EU created European EFTA & EU created European Economic Area (EEA) of 300 million Economic Area (EEA) of 300 million consumers in 1994consumers in 1994


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Central European Free Trade Agreement (CEFTA)

Signed in 1992 in PolandSigned in 1992 in Poland Former members:Former members:

– Poland (left 2004)Poland (left 2004)– Hungary (left 2004)Hungary (left 2004)– Czech Republic (left 2004)Czech Republic (left 2004)– Slovakia (left 2004)Slovakia (left 2004)– Slovenia (left 2004)Slovenia (left 2004)– Romania (left 2007)Romania (left 2007)– Bulgaria (left 2007)Bulgaria (left 2007)


Central European Free Trade Agreement

Current Members– Albania (joined 2007)– Bosnia & Herzegovina (joined 2007)– Croatia (joined 2003)– Macedonia (joined 2006)– Moldova (joined 2007)– Montenegro (joined 2007)– Serbia (joined 2007)– Kosovo (joined 2007)

5Copyright(c) 2012 Dr. Chase C. Rhee

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European Union (EU) The most successful common marketThe most successful common market French foreign minister, Robert Schuman’s French foreign minister, Robert Schuman’s

speech on May 9, 1950, European dayspeech on May 9, 1950, European day European Economic Community (EEC) was European Economic Community (EEC) was

created by the Treaty of Rome in March created by the Treaty of Rome in March 1957 1957 composed of 6 countries: Belgium, Germany, composed of 6 countries: Belgium, Germany, France, Luxembourg, Italy, & the NetherlandFrance, Luxembourg, Italy, & the Netherland

In 1994, EEC became EU with 12 member In 1994, EEC became EU with 12 member countries:countries:– Belgium, Luxembourg, Denmark, France, Belgium, Luxembourg, Denmark, France,

Germany, Ireland, Italy, the U.K., the Germany, Ireland, Italy, the U.K., the Netherlands, Greece, Spain, and PortugalNetherlands, Greece, Spain, and Portugal


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European Union In 1995, Sweden, Finland, and Austria In 1995, Sweden, Finland, and Austria

joined the E.U. Membership increased to joined the E.U. Membership increased to 1515

In 2004, 10 countries joined the EU. In 2004, 10 countries joined the EU. Membership increased to 25Membership increased to 25– Cyprus, Czech Republic, Estonia, Hungary, Cyprus, Czech Republic, Estonia, Hungary,

Latvia, Lithuania, Malta, Poland, Slovak Latvia, Lithuania, Malta, Poland, Slovak Republic, and SloveniaRepublic, and Slovenia

In 2007: Bulgaria & Romania joined & In 2007: Bulgaria & Romania joined & membership increased to 27membership increased to 27

In 2013, Croatia joined as 28In 2013, Croatia joined as 28thth member member 506 million people506 million people


European Union In 1999, the single currency, Euro, was In 1999, the single currency, Euro, was

born.born. In 2002, 11 members replaced their In 2002, 11 members replaced their

currencies with Euro notes and coinscurrencies with Euro notes and coins– 1/1/201/1/201111:1:177 countries, countries, – 1/1/2014: 18 countries (Latvia), 1/1/2014: 18 countries (Latvia), – 1/1/2015: 19 countries (Lithuania)1/1/2015: 19 countries (Lithuania)

Copyright(c) 2012 Dr. Chase C. Rhee 8

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Common Markets

European Union European Union Central American Common MarketCentral American Common Market Andean Common MarketAndean Common Market Caribbean Community and Common Caribbean Community and Common

MarketMarket Economic Community of West Economic Community of West

African StatesAfrican States


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United States Free Trade Agreements U.S. - Israel Free Trade Area Agreement (IFTA) U.S. - Israel Free Trade Area Agreement (IFTA) U.S. - Canada Free Trade Agreement (CFTA) U.S. - Canada Free Trade Agreement (CFTA) North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA) U.S.- Jordan Free Trade Agreement (JFTA) U.S.- Jordan Free Trade Agreement (JFTA) U.S.- Singapore Free Trade Agreement (SFTA)U.S.- Singapore Free Trade Agreement (SFTA) U.S.- Chile Free Trade Agreement (UCFTA)U.S.- Chile Free Trade Agreement (UCFTA) U.S.- Australia Free Trade Agreement (UAFTA)U.S.- Australia Free Trade Agreement (UAFTA) U.S.- Morocco Free Trade Agreement (UMFTA)U.S.- Morocco Free Trade Agreement (UMFTA) U.S. –Central American-Dominican Free Trade U.S. –Central American-Dominican Free Trade

Agreement (CAFTA-DR)Agreement (CAFTA-DR) U.S.-Bahrain Free Trade Agreement (UBTA)U.S.-Bahrain Free Trade Agreement (UBTA) U.S-Oman Free Trade Agreement (OFTA)U.S-Oman Free Trade Agreement (OFTA) U.S.-Peru Trade Promotion Agreement (PTPA)U.S.-Peru Trade Promotion Agreement (PTPA) U.S-Korea Free Trade Agreement (UKFTA)U.S-Korea Free Trade Agreement (UKFTA) U.S.-Colombia Trade Promotion Agreement (UCTPA)U.S.-Colombia Trade Promotion Agreement (UCTPA) U.S.-Panama Trade Promotion Agreement (UPATPA)U.S.-Panama Trade Promotion Agreement (UPATPA) Recent Free Trade AgreementsRecent Free Trade Agreements


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U.S.-Israel Free Trade AgreementU.S.-Israel Free Trade Agreement Phase-in Period: 9/1/85-1/1/95Phase-in Period: 9/1/85-1/1/95 Israeli ProductsIsraeli Products

Wholly the growth, product or Wholly the growth, product or manufacture of Israel manufacture of Israel

If imported materials are used,If imported materials are used,• Substantially transformed into a new, Substantially transformed into a new,

different article of commerce ordifferent article of commerce or• Minimum 35% value added in Israel, West Minimum 35% value added in Israel, West

Bank, Gaza Strip or QIZ Bank, Gaza Strip or QIZ Directly imported from Israel, West Directly imported from Israel, West

Bank, Gaza Strip or Qualifying Industrial Bank, Gaza Strip or Qualifying Industrial Zone into the U.S. Zone into the U.S.

Identified by "IL" in “Special” Subcoulmn Identified by "IL" in “Special” Subcoulmn of the HTSUS of the HTSUS


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U.S.-Israel Free Trade AgreementU.S.-Israel Free Trade Agreement Certificate of Origin Form A must accompany the Certificate of Origin Form A must accompany the

shipment, but not required to be filed at the time shipment, but not required to be filed at the time of entryof entry

Under the amended FTA in 1996, Under the amended FTA in 1996, duty-free treatment is also allowed duty-free treatment is also allowed for products offor products of West BankWest Bank Gaza StripGaza Strip Qualifying Industrial Zone (QIZ): Qualifying Industrial Zone (QIZ): • Duty-free area encompassing portions of Duty-free area encompassing portions of

territories of Israel and Jordan, Israel territories of Israel and Jordan, Israel and Egyptand Egypt

• Designated by U.S. Trade Rep as a QIZDesignated by U.S. Trade Rep as a QIZ


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U.S.-Canada Free Trade U.S.-Canada Free Trade AgreementAgreement

1/1/89-1/1/98 Replaced by NAFTA since 1994


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North American Free Trade North American Free Trade Agreement(NAFTA)Agreement(NAFTA)

Signed August 1992 by Trade Ministers Signed August 1992 by Trade Ministers of Mexico, USA & Canada of Mexico, USA & Canada

Took effect 1/1/94 Took effect 1/1/94 • Yukon of Alaska to Yukatan of Yukon of Alaska to Yukatan of

Mexico Mexico • 370 million people & $ 6 trillion 370 million people & $ 6 trillion

GNP GNP • Imports and exports $254 billion in Imports and exports $254 billion in

19921992


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Elimination of tariff and non-tariff barriers

15-year phase- out period for tariffs by three time tables• 1st reduction 50% of items: Immed.

Eff. Date • 2nd reduction 15% of items: 1st

thru 5th years • 3rd reduction 35% of items: 6th

thru 15th years



Impact of NAFTA – Labor-intensive industries to Mexico – Environment-sensitive industries to

Mexico– U.S.-owned factories in Asia for time-

sensitive products to Mexico– Increased exports among members – Increased investments in NAFTA

countries by non-NAFTA countries due to NAFTA rules of origin

– High paying jobs created will more than offset the losses of low paying jobs in the U.S.


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North American Free Trade Agreement(NAFTA)

General Rules of OriginGeneral Rules of Origin Wholly obtained or produced in Wholly obtained or produced in

NAFTA region NAFTA region Produced entirely in the NAFTA Produced entirely in the NAFTA

region exclusively from originating region exclusively from originating materials materials

If goods incorporate non-originating If goods incorporate non-originating parts (imported materials), parts (imported materials), • A tariff classification change A tariff classification change

alone due to substantial alone due to substantial transformationtransformation


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General Rules of Origin (Continued)• A tariff classification change plus a

minimum Regional Value Content (RVC) requirement. 50% for net cost method and 60% for transaction value method

• If no tariff classification change, a minimum RVC requirement, 50% for net cost or 60% for transaction value method

Directly imported from a member country Identified by MX or CA in “Special”

subcolumn of the HTSUS Importer must possess a NAFTA Certificate

of Origin


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Special Provisions of the Rules-of-Origin

Automobiles: • 1/1/94-1/1/1998: No less than 50%

under Net Cost • 1/1/98-1/1/2002: 56% for 15 or

fewer passengers, 55% for 16 or more passengers

• After 1/1/2002: 62.5% for 15 or fewer passengers, 60% for 16 or more passengers


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North American Free Trade Agreement(NAFTA)

Special Provisions of the Rules-of-Origin (continued) Textiles: Yarn forward process consisting of

3 steps Yarn-->Fabrics-->Garments•Yarn must be made in North America

Computers: Main circuitry (motherboard) from member countries

Television: Picture tube from member countries


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Method of Calculating Value-Added Method of Calculating Value-Added PercentagePercentage

Transaction Value methodTransaction Value method: RVC=(TV-: RVC=(TV-VNM)/TV x 100, 60% or more, VNM: VNM)/TV x 100, 60% or more, VNM: Value of Non-originating MaterialsValue of Non-originating Materials

Net Cost methodNet Cost method: RVC=(NC-VNM)/NC : RVC=(NC-VNM)/NC x 100, 50% or more. Costs excluded: x 100, 50% or more. Costs excluded: Promotion & Marketing, After sale Promotion & Marketing, After sale service, Royalties, Shipping & service, Royalties, Shipping & Packing, Non-allowablePacking, Non-allowable interest


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U.S. –Jordan Free Trade U.S. –Jordan Free Trade Agreement Agreement

Took effect December 17, 2001 Major Elements

Elimination of tariffs within 10 years Free trade in services Protection of intellectual property rights Promotion of liberalized trade

environment for e-commerce Provisions on environmental principles:

Sustainable development Provisions on labor: Full implementation

of national laws & commitment to Int’l Labor Organization (ILO)’s core labor standards

Transparency in dispute settlement procedures


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U.S. –Jordan Free Trade U.S. –Jordan Free Trade AgreementAgreement

General Rules of Origin Wholly the growth, product or

manufacture of Jordan If imported materials are used,

•Goods become new, different articles of commerce and 35% of appraised value created in Jordan

Directly imported to the U.S. “JO” in the “Special” subcolumn of the

HTSUS


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U.S.-Singapore Free Trade U.S.-Singapore Free Trade AgreementAgreement

Took effect on January 1, 2004Took effect on January 1, 2004 Major Areas of AgreementMajor Areas of Agreement

Tariffs to be phased out in 10 years. Most Tariffs to be phased out in 10 years. Most immediatelyimmediately

Substantial access across entire services Substantial access across entire services regime. Use Negative List systemregime. Use Negative List system

Investment protectionInvestment protection Non-discrimination in government Non-discrimination in government

procurementprocurement Non-discrimination in intellectual property. Non-discrimination in intellectual property.

First-in-time, first-in-right principle-The first to First-in-time, first-in-right principle-The first to file for a trademark is granted the first right to file for a trademark is granted the first right to useuse

Make domestic labor standards consistent Make domestic labor standards consistent with ILO’s labor principleswith ILO’s labor principles

Provide a high level of environmental Provide a high level of environmental protectionprotection


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General Rules of OriginGeneral Rules of Origin Goods wholly(100%) obtained or Goods wholly(100%) obtained or

producedproduced If nonoriginating materials are used,If nonoriginating materials are used,

• Goods transformed resulting in Goods transformed resulting in change in tariff classification or change in tariff classification or

• Goods meeting any applicable regional Goods meeting any applicable regional value content (RVC) not less than 35% value content (RVC) not less than 35% under the build-up method (VOM/AV x under the build-up method (VOM/AV x 100) and 45% under the build-down 100) and 45% under the build-down method [(AV-VNM)/AV x 100]method [(AV-VNM)/AV x 100]

VOM: Value of originating materials AV: Adjust value which means entered

value or FOB price VNM: Value of nonoriginating materials



Goods with not more than 10% Goods with not more than 10% nonoriginating materials if no change nonoriginating materials if no change in tariff classificationin tariff classification

Directly imported Directly imported ““SG” in the “Special” subcolumn of the SG” in the “Special” subcolumn of the

HTSUSHTSUS


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US-Chile Free Trade US-Chile Free Trade Agreement Agreement


Tariffs to be phased out in 12 years. 85% Tariffs to be phased out in 12 years. 85% immediatelyimmediately

Substantial market access to entire service Substantial market access to entire service regime. Use Negative List systemregime. Use Negative List system

Protection of all forms of investments Protection of all forms of investments Non-discrimination in intellectual property. Non-discrimination in intellectual property.

First-in-time, first-in-right principle. Chilean First-in-time, first-in-right principle. Chilean government ensures that its agencies use government ensures that its agencies use only legitimate computer softwareonly legitimate computer software

Non-discrimination in government Non-discrimination in government procurementprocurement

Make domestic labor laws consistent with the Make domestic labor laws consistent with the ILO’s labor principlesILO’s labor principles

Provide a high level of environmental Provide a high level of environmental protectionprotection


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US-Chile Free Trade Agreement US-Chile Free Trade Agreement


producedproduced If nonoriginating materials are used, If nonoriginating materials are used,

• Goods transformed resulting in change in Goods transformed resulting in change in tariff classification ortariff classification or

• Goods meeting any applicable regional Goods meeting any applicable regional value contentvalue content

Directly imported Directly imported ““CL” in the “Special” subcolumn of CL” in the “Special” subcolumn of

the HTSUSthe HTSUS


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U.S.-Australia Free Trade U.S.-Australia Free Trade Agreement Agreement


Tariffs to be phased out in 10 years. Tariffs to be phased out in 10 years. 99% immediately99% immediately

National and most-favored treatment National and most-favored treatment for all sectors of servicesfor all sectors of services

Protection of investmentsProtection of investments Non-discrimination in government Non-discrimination in government

procurementprocurement Protection of intellectual property Protection of intellectual property

rightsrights Make domestic labor laws consistent Make domestic labor laws consistent

with the ILO’s labor principleswith the ILO’s labor principles Provide a high level of environmental Provide a high level of environmental

protectionprotection


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U.S.-Australia Free Trade U.S.-Australia Free Trade Agreement Agreement


producedproduced If nonoriginating materials are used, If nonoriginating materials are used,

• Goods transformed resulted in change in Goods transformed resulted in change in tariff classification ortariff classification or

• Goods meeting any applicable regional Goods meeting any applicable regional value contentvalue content

Directly importedDirectly imported ““AU” in the “Special” subcolumn of the AU” in the “Special” subcolumn of the

HTSUSHTSUS


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U.S.-Morocco Free Trade U.S.-Morocco Free Trade Agreement Agreement

Took effect on January 1, 2006Took effect on January 1, 2006 Major areas of agreementsMajor areas of agreements

95% of products duty-free immediately & 95% of products duty-free immediately & remaining products in 9 yearsremaining products in 9 years

National treatment of each other’s National treatment of each other’s goodsgoods

Duties on agricultural goods to be Duties on agricultural goods to be phased out in 18 years. Use tariff-rate phased out in 18 years. Use tariff-rate Quotas (TROs). No export subsidiesQuotas (TROs). No export subsidies

Allowed safeguard measuresAllowed safeguard measures Strong protection for labor & Strong protection for labor &

environmentenvironment


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U.S.-Morocco Free Trade U.S.-Morocco Free Trade Agreement Agreement

General Rules of OriginGeneral Rules of Origin Goods wholly(100%) obtained or producedGoods wholly(100%) obtained or produced A good of nonoriginating materials which A good of nonoriginating materials which

undergoes an applicable change in tariff undergoes an applicable change in tariff classification andclassification and

A new or different article: Value created in A new or different article: Value created in the UMFTA countries not less than 35% of the UMFTA countries not less than 35% of appraised valueappraised value

Directly importedDirectly imported ““MA” in the “Special” subcolumn of the MA” in the “Special” subcolumn of the

HTSUSHTSUS


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Dominican Republic-Central Dominican Republic-Central America-U.S. Free Trade America-U.S. Free Trade Agreement (DR-CAFTA)Agreement (DR-CAFTA)

Members– Dominican Republic– Costa Rica– El Salvador– Guatemala– Honduras– Nicaragua– United States

Signed by trade ministers of 7 nations in August 2004.


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Dominican Republic-Central America-U.S. Free Trade Agreement (DR-CAFTA) Rolling Admissions

– El Salvador on March 1, 2006– Honduras on April 1, 2006– Nicaragua on April 1, 2006– Guatemala on July 1, 2006– Dominican Republic on March 1,

2007– Costa Rica: Approved by

referendum on October 8, 2007 & admitted 1/1/2009


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Dominican Republic-Central America-Dominican Republic-Central America-U.S. Free Trade Agreement (DR-U.S. Free Trade Agreement (DR-CAFTA)CAFTA) Major Areas of Agreement

80% of U.S. products duty free immediately and remaining products in 10 years. DR-CAFTA product already duty free under CBI or GSP

National treatment Agriculture: Tariff-rate quotas only and no

export subsidies Safeguard measures for agriculture & textile Strong protection of labor and environment Strong protection for U.S. investors &

mechanism for investor-state disputes Open and fair government procurement Yarn-forward rule for textiles


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Dominican Republic-Central Dominican Republic-Central America-U.S. Free Trade America-U.S. Free Trade Agreement (DR-CAFTA)Agreement (DR-CAFTA)

General Rules of Origin Good wholly obtained or produced in

FTA countries If nonoriginating material used,

• Applicable change in tariff classification or• Applicable regional value content

Good produced exclusively from originating materials

Identified by “P” or “P+” in the subcolumn of the HTSUS


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U.S.-Bahrain Free Trade U.S.-Bahrain Free Trade Agreement Agreement

Entered into force on August 1, 2006 Major Areas of Agreement

100% of industrial and consumer goods & 98% of agricultural goods duty free immediately and others in 10 years

National treatment Agriculture: Tariff-rate quota only and no

export subsidies Safeguard measures for textile & apparel Strong protection of labor and

environment Strong protections for U.S. investors

including a mechanism for investor-state disputes


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U.S.-Bahrain Free Trade U.S.-Bahrain Free Trade Agreement (BFTA)Agreement (BFTA)

Major Areas of Agreement (continued) No discrimination against U.S. firms in

Bahraini government purchases Yarn forwarding rules for textiles Substantial market access for entire

services regime by using “negative system”

Requires each government to prohibit bribery and establish appropriate criminal penalties to punish violators


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U.S.-Bahrain Free Trade U.S.-Bahrain Free Trade Agreement Agreement

General Rules of Origin Wholly growth, product or manufacture New or different article of commerce &

value created in UBFTA not less than 35% of the appraised value

A good covered by a product-specific rule & each of nonoriginating materials undergoes an applicable change in tariff classification

Directly imported in the U.S. or Bahrain Identified by “BH” in the “Special”

subcolumn of the HTSUS


U.S.-Oman U.S.-Oman Free Trade Free Trade AgreementAgreement

Signed by Pres. Bush on 9/26/06 Entered into force on 1/1/09. Took

more than 2 years to enact regulations by Oman

Immediate duty-free for most industrial and consumer goods, and 87% of agricultural products

Remaining products tariffs phase out within 10 years


U.S.-Oman U.S.-Oman Free Trade Free Trade AgreementAgreement

General Rules of Origin– Wholly the growth, product or manufacture

of Oman or the U.S.– Substantially transformed products with

change in tariff classification and– Not less than 35% created in Oman – Directly imported– “OM” in the “Special” subcolumn of the

HTSUS


U.S.-Peru U.S.-Peru TradeTrade Promotion Promotion AgreementAgreement

Signed by Pres. Bush on 12/14/07 Entered into force on 2/1/09 Immediate duty free for 80% of

consumer & industrial goods. Remaining goods in 10 years

Immediate duty free for 2/3 of agricultural products. Remaining products in 15-17 years


U.S.-Peru U.S.-Peru TradeTrade Promotion Promotion AgreementAgreement

General Rules of Origin– Wholly obtained or produced in a member

country– Substantially transformed with change in

tariff classification or– Applicable regional value content– “PE” in the “Special” subcolumn of the

HTSUS


U.S.-Korea Free Trade Agreement

Concluded on 6/30/2007 Ratified by U.S. congress on 10/12/2011 & by

Korean congress on 11/22/2011 Took effect on 3/15/2012 The largest FTA after NAFTA of 1994 Korea is the 15th largest economy in the world and

7th largest trading partner of the U.S.



Major areas of agreement– Almost 80% of goods became duty-free on the 1st day

and 95% duty-free in 5 years

– Most remaining duties will be free in 10 years

– High level of openness of services sector

– Strong protection for investors through international arbitration system instead of other country’s legal system

– Equal treatment for government procurements

– Protection of workers’ rights & enforcement of labor laws

– Protection of environments



General rules of origin– Good wholly obtained or produced entirely in the

territory of Korea or the U.S. or both.

– Good produced entirely in the territory and,• Nonoriginating materials undergo tariff classification change

and/or

• Good otherwise satisfies any applicable regional value content

– Produced exclusively from originating materials

– Value of nonoriginating materials doe not exceed 10% of the adjusted value

– For textile or apparel, total weight of nonoriginating fibers and yarns does not exceed 7% of total weight of component. Otherwise, yarn-forward rule for most cases



General rules of origin (continued)– Directly imported from Korea

– A good identified by the symbol “KR” in the subcolumn of the HTSUS

Product-specific rules (PSR) per General Note 33(o) of the HTSUS– A tariff classification change between nonoriginating materials

and finished goods unless excluded and/or– Regional value content (RCV) for general goods with some exceptions:

35% under buildup ](VOM/AV) x 100] or 45% under builddown [(AV-VNM)/AV x 100]

– RCV for automotive goods of chapters 84 and 87: 35% under build-up, 55% under build down, 35% under net cost [(NC-VNM)/NC] x 100


U.S.-Colombia Trade Promotion Agreement

Concluded on 11/22/2006 Ratified by U.S. congress on 10/12/2011 Took effect on 5/15/2012 Major areas of agreement

– Over 80% became duty-free on the 1st day with remaining tariffs phased out over 10 years

– Includes greater protection for intellectual properties, labor rights, and environment

– Opens services sector and government procurement


U.S.-Colombia Trade Promotion Agreement General rules of origin

– Wholly obtained or produced entirely in the territory

– If nonoriginating materials are used in production• Tariff classification change and/or

• Regional value content requirement: 35% or 45%

– Produced exclusively from originating materials

– Nonoriginating materials not exceeding 10% of adusted value

– For textile and apparel: weight of nonoriginating fibers and yars not exceeding 10% of total weight of component. Otherwise, yarn-forward rule

– Symbol “CO” in the “Special” subcolumn of the HTSUS


U.S.-Panama Trade Promotion Agreement

Concluded on 6/28/2007 Ratified by U.S. congress 10/12/2011 Signed by Pres. Obama on 10/21/2011 Took effect on 10/31/2012 Major areas of agreement

– About 86% became duty-free immediately

– For agricultural products will be duty-free in 15 years

– Symbol “PA” in the “Special” subcolumn of the HTSUS


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Recent Free Trade Recent Free Trade AgreementsAgreements FTAs under Negotiation

– Trans-Pacific Partnership (TPP) (Asia-Pacific free trade agreement)

• The 1st round of negotiation: March 15-19, 2010

• The 12 current TPP partner countries – Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.


Recent Free Trade Recent Free Trade AgreementsAgreements FTAs under Negotiation (cont.)

– Trans-Atlantic Trade and Investment Partnership (T-TIP)• Trade & investment agreement being

negotiated between the United States and the European Union

Copyright(c) 2012 Dr. Chase C. Rhee 52

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