Having the ability to lower your cost of goods becomes an important effort and the use of Free Trade Agreements (FTAs) to minimize the impact becomes an important role with many multinational companies. Today, there are many FTAs in place along with the expectation of additional ones in the future, not only in the United States but in many of the countries that manufacture goods from electronics to apparel to chemicals.
Leaving money on the table can be a difficult that one certainly resonates with global suppliers.
At a recent BDP regulatory session, global FTAs and trade facilitation was presented to the attendees and a live anonymous poll was conducted to understand some of the current workloads that companies face with FTAs.
Here is what we learned: 59% of the respondents told us that they have a good infrastructure in place already that manages all of their programs, which is great news to hear, however - 41% of the respondents provided the other side, they don’t have a good system in place. Our definition of infrastructure was a “system in place."
There is some difficulty in putting the right system in place for not all FTAs follow the same set of rules for origin, as explained in the session. Systems need to identify the collection of all data, documents, costs, and classification to ensure that the eligibility of products can be met.
FTAs bring much work that involves procurement, trade management, finance, and customs departments all working together. We also asked the attendees their opinion about the current US FTAs, seeking to know if they wished for more agreements or the present amount was enough. We learned that most attendees stated that the US should be more aggressive with new FTAs, with a 74% response in favor of such and 26% felt that the current amount of FTAs was enough to manage their business.
Companies need to develop good standard processes when it comes to the management of these programs as well as great documents that clearly map their steps from start to finish. Having hundreds of suppliers around the world brings unique challenges that many companies are facing today, and the number of suppliers will only continue to grow as well as the number of Free Trade Agreements.