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Most Exporters Don't Take Advantage Of Free Trade Agreements, Survey FindsTuesday, November 10, 2015 > 10:57:19
Most companies involved in import and export don’t use free trade agreements that are available to them, according to a new survey by Thomson Reuters TRI +% and KPMG.
The reason they don’t use them is that complying with rules of origin and other requirements is so complicated and time-consuming that companies find it’s not worth the trouble or the risk of penalties for non-compliance.
“Not only can compliance with the regulations be burdensome and non-compliance result in costly penalties, but the fear of non-compliance can lead to savings opportunities not taken,” said James Carneiro, a Thomson Reuters trade expert. “The complexity for both importer and exporters in dealing with FTAs is already significant and bound to increase over time.”
Thomson Reuters and KPMG surveyed global trade management professionals from multiple manufacturing industries in 11 countries, including the United States, between March and June of 2015. The respondents were asked about many aspects of their work.
Asked if they were “fully utilizing all the free trade agreements available in (their) country and applicable to (their) products,” only 30% said yes. The highest percentage was in the U.S – 41%. The lowest were in Brazil – 18% – and India – 19%.
Worldwide, trade specialists said the biggest challenge in using FTAs was the “complexity of rules of origin.”
To qualify for duty-free treatment under an FTA, an exporter has to certify that a certain percentage of the product to be exported was made in the exporting country. Rules of origin vary by FTA and by product.