US Free Trade Agreements: Complete Guide to Preferential Duty Rates
The United States has 14 active free trade agreements (FTAs) covering 20 countries. If you're importing from any of these countries, you may qualify for significantly reduced — or zero — import duties. Yet many importers don't claim these benefits, either because they don't know about them or think the paperwork is too complicated.
It's usually not. Here's how to take advantage.
All US Free Trade Agreements
| Agreement | Countries | Year | HTS Marker |
|---|---|---|---|
| USMCA | Canada, Mexico | 2020 | CA, MX |
| KORUS | South Korea | 2012 | KR |
| Australia FTA | Australia | 2005 | AU |
| CAFTA-DR | Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua | 2006 | P, P+ |
| Chile FTA | Chile | 2004 | CL |
| Colombia TPA | Colombia | 2012 | CO |
| Israel FTA | Israel | 1985 | IL |
| Jordan FTA | Jordan | 2001 | JO |
| Morocco FTA | Morocco | 2006 | MA |
| Oman FTA | Oman | 2009 | OM |
| Panama TPA | Panama | 2012 | PA |
| Peru TPA | Peru | 2009 | PE |
| Singapore FTA | Singapore | 2004 | SG |
| Bahrain FTA | Bahrain | 2006 | BH |
How FTA Rates Work in the HTS
When you look up an HTS code, you'll see three rate columns:
- Column 1 General: The MFN rate — applies to most countries (WTO members)
- Column 1 Special: Preferential rates for FTA partners and preference programs (GSP, AGOA, etc.)
- Column 2: The highest rate — applies to non-MFN countries (Cuba, North Korea, Russia)
FTA rates appear in the "Special" column, marked with country codes like "CA" (Canada), "KR" (Korea), or "AU" (Australia). Many show "Free" — meaning zero duty if your product qualifies.
How to Qualify for Preferential Rates
You can't just import from an FTA country and automatically get the lower rate. Your product must meet rules of origin — proof that it was substantially made in the FTA partner country. Requirements vary by agreement, but generally include:
- Tariff shift rule: Raw materials must undergo a sufficient transformation (change in HTS classification)
- Regional value content: A minimum percentage of value must originate in the FTA country
- Certification of origin: A document (form varies by agreement) certifying the product qualifies
Preference Programs (Not FTAs)
In addition to FTAs, the US has several unilateral preference programs that grant reduced duties to developing countries:
- GSP (Generalized System of Preferences): Duty-free on eligible products from ~120 developing countries (status varies — check current eligibility)
- AGOA (African Growth and Opportunity Act): Expanded duty-free access for sub-Saharan African countries
- CBI (Caribbean Basin Initiative): Preferences for Caribbean nations not covered by CAFTA-DR
The Money You're Leaving on the Table
Consider a practical example: You import $500,000 worth of auto parts from South Korea annually.
- Without KORUS: 2.5% MFN rate = $12,500/year in duties
- With KORUS: Free = $0/year in duties
- Savings: $12,500/year for some paperwork
For higher-rate products (textiles at 10-32%, footwear at 8-48%), the savings are even more dramatic.
Common Mistakes
- Not claiming FTA rates at all — the biggest mistake. If you qualify, claim it.
- Claiming without a valid certification — if audited, you'll owe back duties plus penalties
- Confusing country of shipment with country of origin — a Chinese product shipped through Korea doesn't qualify for KORUS rates
- Forgetting about the 2026 surcharge — some FTA preferences may not fully offset the new import surcharge