How Free Trade Agreements Work

One of the most widely discussed issues in international freight shipping, is the usage of a free trade agreement. Essentially, the free trade agreement disregards existing tariffs, between two nations (or a group of nations) to promote trade, and economic growth for all of the people in those nations. For example, if you wanted to ship cargo, to another nation, you normally have to pay a tariff. But if that nation has a free trade agreement with the nation you are shipping from, then those extra fees are eliminated. The goal is to increase the cargo at the ports, by lowering the expenses. A free trade agreement might also help lower ocean container rates. The nations involved in a free trade agreement still maintain their own Customs, laws and officials that police the imported freight.

NAFTA (the North American Free Trade Agreement) is the largest trade bloc in the World. The nations involved with NAFTA include Canada, Mexico and the United States. In addition to NAFTA, the United States also has free trade agreements with other countries for cargo shipping. This list includes Israel, Jordan, Australia, Chili, Morocco, Peru, Panama, Columbia, South Korea and other nations. And the United States is still negotiating trade agreements with other nations. Shippers in the US should consider shipping to these countries.

Critics of free trade agreements argue that it only benefits developed nations and wealthy people. While the debate on free trade agreements continues to occur, the impact on* ocean freight* has been very important.