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Navigating Practical Challenges in Free Trade Agreements: Objectives and Compliance

This article by Adriana Ibarra-Fernández delves into the objectives of Free Trade Agreements (FTAs), focusing on key aspects such as tariff elimination, national treatment, and transparency. It highlights practical challenges that arise, including issues with Certificates of Origin, compliance risks, and the complexities of legal and accounting differences across parties. It advocates for a change in mindset towards compliance and emphasizes the importance of understanding the rules of origin to facilitate trade and minimize risks within FTAs.

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Navigating Practical Challenges in Free Trade Agreements: Objectives and Compliance

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Presentation Transcript

  1. Practical challenges with free trade agreements Adriana Ibarra-Fernández

  2. Objectives of Free Trade Agreements Article 102: Objectives 1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favored-nation treatment and transparency, are to: • eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties; • …

  3. Objectives of Free Trade Agreements Article 302: Tariff Elimination 1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good. • 2. Except as otherwise provided in this Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 302.2. • …

  4. Objectives of Free Trade Agreements Article 401: Originating Goods Except as otherwise provided in this Chapter, a good shall originate in the territory of a Party where: a) wholly obtained or produced entirely …; b) change in tariff classification / regional value content requirements; c) produced entirely in the territory exclusively from originating materials; or d) except for Chapters 61 through 63, the good does not undergo a change in tariff classification (Rule 2 a / Heading specifically describes the good and its parts).

  5. Certificate of Origin – Practical Problems • Certificates of Origin have been issued without evidencing the originating character of the goods • “Just another document” (P.O., Invoice, COO…) • Country of Origin / Country of Exportation

  6. “There’s nothing free about Free Trade” 80% Exporter X Importer

  7. “There’s nothing free about Free Trade” Objectives of Free Trade Agreements

  8. Origin Analysis / Evidence of Compliance • No origin analysis • Changes of sourcing / origin = No update • Changes to rules of origin / HS

  9. Verifications of Origin • Scope - Too broad • Insufficient knowledge by the Exporter • Language barriers • Different legal / accounting systems

  10. Conclusions • COMPLIANCE • Minimize risk • Change Mindset

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