Free Trade Agreement in the United States
Free Trade Agreement in the International Business Landscape
Definition of Free Trade Agreement in the context of U.S. international business and public trade policy: An arrangement between two or more nations to remove barriers to the trade they conduct with one another. An FTA also usually addresses trade-distorting practices such as government subsidies. Under such an agreement, concessions are not on an MFN (most-favored nation) basis, but only to the parties to the FTA. Since such agreements were authorized by the Trade and Tariff Act of 1984, the United States has negotiated FTAs with Israel and Canada, and a North American Free Trade Agreement (NAFTA) with Canada and Mexico.
Trade Agreements
Trade Agreements can create opportunities for Americans and help to grow the U.S. economy.
The Office of the U.S. Trade Representative (USTR), which is part of the Executive Office of the President, has principal responsibility for administering U.S. trade agreements. This involves monitoring our trading partners’ implementation of trade agreements with the United States, enforcing America’s rights under those agreements, and negotiating and signing trade agreements that advance the President’s trade policy.
The United States is Member of the World Trade Organization (WTO), and the Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement) sets out rules governing trade among the WTO’s 154 members. The United States and other WTO Members are currently engaged in Doha Development Round of world trade talks, and a strong, market-opening Doha agreement for both goods and services would be an important contribution to addressing the global economic crisis and helping to restore trade’s role in leading economic growth and development.
The United States has free trade agreements (FTAs) in effect with 20 countries. These free trade agreements build on the foundation of the WTO Agreement, with more comprehensive and stronger disciplines than the WTO Agreement. Many of our free trade agreements are bilateral agreements between two governments. But some, like the North American Free Trade Agreement and the Dominican Republic-Central America-United States Free Trade Agreement, are multilateral agreements among several parties.
Another important type of trade agreement is the Trade and Investment Framework Agreement. TIFAs provide frameworks for governments to discuss and resolve trade and investment issues at an early stage. These agreements are also a means to identify and work on capacity-building where appropriate.
The United States also has a series of Bilateral Investment Treaties (BITs) help protect private investment, develop market-oriented policies in partner countries, and promote U.S. exports.
Free Trade Agreements
The United States has free trade agreements in force with 20 countries. These are:
Australia
Bahrain
Canada
Chile
Colombia
Costa Rica
Dominican Republic
El Salvador
Guatemala
Honduras
Israel
Jordan
Korea
Mexico
Morocco
Nicaragua
Oman
Panama
Peru
Singapore
The United States has completed negotiations of a regional, Asia-Pacific trade agreement, known as the Trans-Pacific Partnership (TPP) Agreement and is in negotiations of the Transatlantic Trade and Investment Partnership (T-TIP) with the European Union, with the objective of shaping a high-standard, broad-based regional pact.
Trade & Investment Framework Agreements
Trade and Investment Framework Agreements (TIFAs) provide strategic frameworks and principles for dialogue on trade and investment issues between the United States and the other parties to the TIFA. Learn more about Trade & Investment Framework Agreements.
Bilateral Investment Treaties
The U.S. bilateral investment treaty (BIT) program helps to protect private investment, to develop market-oriented policies in partner countries, and to promote U.S. exports. Here is a list of U.S. Bilateral Investment Treaties.
Other Initiatives
In addition to pursuing U.S. trade policy objectives through bilateral and multilateral trade and investment agreements, USTR is pursuing plurilateral agreements under the World Trade Organization, while working with Congress on Trade Promotion Authority (TPA), the legislation that defines negotiating objectives and priorities for trade agreements.
The United States is also participating in negotiations of the Trade in Services Agreement (TiSA), a free trade agreement focused on promoting fair and open competition across a broad spectrum of service sectors. Twenty-three economies are participating in the TiSA negotiations, representing nearly 70 percent of the world’s $55 trillion services market. With every $1 billion in services exports supporting an estimated 5,900 U.S. jobs, promoting the expansion of services trade globally will pay dividends for the United States.
In July 2014, the United States and 13 WTO Members launched negotiations on the Environmental Goods Agreement (EGA), an agreement aimed at eliminating tariffs on a range of environmental goods. Tariffs on these environmental goods, including wind turbines, solar water heaters, and catalytic converters are often high and limit the technological advancement for green technologies. The EGA provides an important opportunity to protect the global environment while unlocking economic opportunity for American workers and businesses.