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In 2013, companies in the United States, the world’s richest country, imported about $2.33 trillion worth of goods and services. US buyers scooped up more than $303 billion worth of electronics imported from other countries. They spent about $253 billion for vehicles from beyond the country’s borders. Another $72 billion went to imported medical equipment and technology. Hundreds of $billions more purchased virtually every other type of good imaginable from countries all around the globe: agricultural products, raw materials, and myriad manufactured products.
Trade is, of course, a two-way street, and exports from American companies to partners across borders were almost as great.
Who does the US trade more with than any other country? The answer might surprise some. It’s the neighbor to the north, Canada, a country with a population of just 35 million. Mexico, which shares a border with the US to the south, comes in second. Proximity helps, but wouldn’t be enough to edge out China, the world’s second largest economy with a population of 1.357 billion people.
“Canada is number one in part because there’s no tariff on goods going back and forth,” says Doug Barry, an international trade specialist with the US Commercial Service, part of the Department of Commerce.
Thanks to the North American Free Trade Agreement (NAFTA) between the US, Canada, and Mexico, in force since 1994, all duties were completely eliminated on trade among the countries in January 2008. All three partner nations have taken full and mutual advantage. More than $1 trillion in goods and services were traded among the three in 2012. (Services, although not subject to tariffs, can be inhibited when there’s no trade agreement by local licensing and other regulations).
The US has similar trade agreements with 18 other nations, and two major multi-national FTAs are currently being negotiated.
What makes these agreements so important? Without an FTA in place, “The average duty is five percent, but it can go up to 30, 35, even more,” says Barry. For most goods, he notes, FTAs immediately move that cost off the balance sheet, giving companies in partner countries a substantial advantage over competitors from non-partner countries.
Doug Barry literally wrote the book on how to utilize the US’s agreements. “Free Trade Agreements—20 Ways to Grow Your Business” (Publisher: U.S. Department of Commerce, International Trade Administration/ITA Commercial Service) takes readers step-by-step on a journey through working with the 20 countries that have trade agreements with the US. The book points to how each FTA can help the small to medium-sized enterprise expand its reach and profitability, and also how to navigate smoothly through unfamiliar geographical, cultural, and legal terrain.
Most agreements eliminate about 80 to 85% of duties right away but not all goods immediately get duty-free treatment under FTAs. Some are phased in over periods as long as 15 years
“For certain sensitive industries and sensitive products in the importing country, a phase-in period allows those affected by the FTA to prepare themselves for the eventuality that there will be no tariff on the goods that are coming in,” explains Barry, giving breathing space to local enterprises to prepare for international competition.
“So you can tell the buyer,” says Barry, “that every year you buy from me, it will cost you a bit less until the duty hits zero.”
But there’s more to encourage trade than expand bottom lines for the companies involved. As 19th century economist Frederic Bastiat famously said, “When goods cross borders, armies don’t.”
Trade agreements “definitely bring governments closer together,” says Barry, as they work together, first, to hammer out the mutually beneficial details of the deal and, longer-term, they continue to help businesses overcome any barriers to operations.
“If problems arise and there are uneven applications of the law in a specific market, including in the US, there are mechanisms for the governments to meet and resolve disputes.”
Many of the US’s free trade agreements are with smaller nations, such as Singapore and Israel, but size doesn’t always indicate the value of the FTA.
“Singapore is located in a very important neighborhood, adjacent to one of most populated countries in the world, Indonesia,” says Barry, “and it’s within easy flying distance and shipping distance of many other countries, including China.”
Barry says that the Singaporeans are great traders who often have excellent relationships with importers in those much larger markets. “By selling to distributors in Singapore and getting that zero duty benefit, you could see your goods going into some of these adjacent markets and they could buy fairly substantial quantities.”
And while Israel has fewer people than New York City, its FTA with the US has made it an extremely important market, says Doug Barry. “US companies often invest in and sometimes buy outright some of these Israeli start-ups and they’ve come up with cutting edge technologies,” he says. “Because of the free trade agreement, US companies can invest in and purchase these companies without any restrictions.”
Closer to home, the US has free trade agreements with a number of countries in Latin America, including Chile, a thriving market in itself, says Barry, but with significance that extends beyond its perimeters.
“Chile is a very important trading hub on the continent. So if you’re shipping with distributors in Chile, chances are they have relationships with nearby countries—Brazil, Uruguay, Peru, Argentina—and they could be selling your goods to end-users in those countries.”
So, how do you take advantage of the FTAs that are in place now—or that will be in the future?
Trade groups and government agencies within the participating countries help make it easier for both experienced international traders and businesses new to their markets to trade with each other. In the US, www.export.gov is the place to start. Among the myriad tools, you’ll find webinars and other training on the basics of exporting; detailed information on doing business in other countries; opportunities to join trade missions; information about businesses in FTA partner countries looking for what you want to export—or ready to import what you hope to buy; and a handy online calculator that will tell you if your goods qualify for tariff-free treatment under a specific FTA.
NAFTA requires a paper certificate that has to be filled out by the shipper. But other US FTAs require nothing more than a declaration on the invoice that the goods are made in the FTA country and meet the content requirements of the agreement.
As valuable as current agreements are, “In the coming months, two more will make the individual agreements that we have with individual countries pale in comparison,” says Barry.
The Trans-Atlantic Free Trade Agreement (TAFTA), currently in negotiations, would include virtually the entire European continent—making it the world’s largest free trade area. The Trans-Pacific Partnership (TPP) is expected to bring together Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—and, of course, the US.
Each, says Barry, “would promote tremendous growth among all the economies involved.”
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| PCM404440B bearing | 40 | 44 | 40 |
| PCM404430E bearing | 40 | 44 | 30 |