Issues and Challenges
Free trade agreements (FTAs) are essentially contractual arrangements between countries concerning their trade relationships. They may be bilateral or multilateral, that is, between two countries or more than two countries, and they result in lower tariff barriers between the participating members.
While FTAs can be a source of significant cost savings, the effort of administering an FTA program is not always worth the perceived gain for importers. This is because importers typically manage FTAs manually. When a new product is sourced, an importer must determine whether any FTAs apply, and then solicit suppliers to obtain product information and certificates of origin that meet the requirements of the particular agreement. Managing thousands of products for multiple agreements can quickly become overwhelming.
On the other end, exporters must qualify their goods and provide the certificates to their buyers. This involves processing a potentially complex bill of materials (BOM) against the rules of origin for the relevant trade agreements. The results of the qualification analysis form the basis for the certificates of origin and preferential duty treatment for the product.
How Amber Road Can Help
Amber Road's Trade Agreement Management solution automates the supplier solicitation, qualification and certificate management processes for importers and exporters. By associating certifications with products, the system maintains audit trails of preferential claims and how they were achieved.
A global trade management system enables importers and exporters to automate key free trade agreement management processes such as:
Free trade agreements such as NAFTA, CAFTA and others represent an attractive opportunity for exporters to grow their business overseas by making their products more affordable in growing markets. And for importers, FTAs allow them to dramatically lower the duties and taxes they pay.
Today there are more than 500 free or preferential agreements around the world for companies to use.
“By automating the NAFTA qualification process, generating accurate trade documentation to maintain export compliance, and taking advantage of preferential duties, we save $1.2 million in duties and taxes.”
Project Manager Global Logistics, Trade and Compliance