they’re the largest exporters of goods to the U.S. If you want to be an exporter, look at China, Mexico, Malaysia, Thailand, India, and Turkey, the largest importers of American products.
✔ They offer a favorable business climate.
✔ Regulations to do business there are not insurmountable.
✔ They have an established transportation infrastructure.
✔ They’ve earned foreign exchange (money) by exporting their products. As countries grow and export more goods to the U.S., they have more money that they can use to purchase goods from the U.S.
Making use of trade agreements
Trade agreements involve a small group of countries getting together to establish a free-trade area among themselves while maintaining trade restrictions with all other nations. These agreements provide improved market access for consumer, industrial, and agricultural products from the U.S.
Trade agreements also can help your business enter and compete more easily in the global marketplace. They help level the international playing field and encourage foreign governments to adopt open rule-making procedures as well as laws and regulations that don’t discriminate. Free-trade agreements (FTAs) help strengthen business climates by eliminating or reducing tariff rates, improving intellectual property regulations, opening government procurement opportunities, and easing investment rules.
These agreements provide the following benefits to small and medium-size exporters:
✔ They reduce high tariffs on U.S. exports, which lowers the cost of selling to customers overseas.
✔ They maximize small-business resources by eliminating inconsistent Customs procedures and improving and reducing burdensome paperwork.
✔ They minimize risks in foreign markets by providing certainty and predictability for U.S. small-business owners and investors.
✔ They enforce intellectual property rights.
✔ They promote the rule of law so that small businesses know what the rules are and that they’ll be applied fairly and consistently.
U.S. importers also benefit from such trade agreements. Just as the countries with whom the U.S. has a trade agreement have to provide improved market access for American goods, the U.S. must provide similar considerations to the countries with which the U.S. has an agreement. So if you’re an importer and you deal with the countries the U.S. has agreements with, you’ll also experience the elimination or reduction of tariff rates.
The U.S. has trade agreements with the following countries (I’ve organized the list by continent):
✔ North America: Canada and Mexico, under the North American Free Trade Agreement (NAFTA)
✔ Central America and the Caribbean: Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua, under the Dominican Republic–Central America–United States Free Trade Agreement (CAFTA-DR); Panama, under the United States–Panama Free Trade Agreement
✔ South America: Chile, under the United States–Chile Free Trade Agreement; Colombia, under the United States–Colombia Trade Promotion Agreement; Peru, under the United States–Peru Trade Promotion Agreement
✔ Australia: Australia, under the United States–Australia Free Trade Agreement
✔ Asia: Korea, under the United States–Korea Free Trade Agreement; Singapore, under the United States–Singapore Trade Agreement
✔ Middle East/North Africa: Bahrain, under the United States–Bahrain Free Trade Agreement; Israel, under the United States–Israel Free Trade Agreement; Jordan, under the United States–Jordan Free Trade Agreement; Morocco, under the United States–Morocco Free Trade Agreement; Oman, under the United States–Oman Free Trade Agreement
At the time of publication, the United States was also in the process of negotiating a regional FTA, the Trans-Pacific Partnership, with Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
You can access complete details on these trade agreements at http://export.gov/fta/ or https://ustr.gov/trade-agreements. Or if you’d like additional information on exporting to any FTA partner country, contact the Trade Information Center at 800-872-8723.
✔ The goods must be imported directly from the beneficiary country (the country that has signed and is part of the agreement) to the U.S.
✔ The goods must be manufactured in the beneficiary country. This condition is met if the goods are wholly produced or manufactured in the country or if the goods have been substantially transformed into a new article in the country.
Here’s an example of how a trade agreement created an opportunity to sell American goods abroad.
Andrew Will Winery, established in 1989, is a family-owned winery on Vashon Island, in Yakima, Washington. The winery, which started exporting to Asia over a decade ago, now distributes its wines to 12 countries around the world. The winery began exporting to Korea two years ago, after receiving interest from importer Inquen Lee of Wine 2U Korea. In the past two years, Wine 2U Korea has imported 150 cases of Andrew Will wines.
Following the implementation of the United States–Korea Free Trade Agreement (KORUS FTA), Andrew Will Winery took steps to expand its presence in Korea. With cost reductions from the KORUS FTA and increased interest in Washington wines, the winery sees opportunities to grow its business there. The implementation of the KORUS FTA creates an opportunity for Washington wines by increasing awareness of American products and lowering costs.
Lowering manufacturing costs
Most businesses go overseas to obtain lower manufacturing costs and protect themselves from lower-priced imports being sold in their own country. There are many arguments for and against sourcing goods from overseas suppliers. Sourcing products from overseas can give you the following advantages:
✔ Lower costs: A company can go abroad and enjoy the benefits of lower labor and
