Free trade agreement (FTA)
A free trade agreement is a treaty under which two or more countries remove duties on substantially all trade in goods originating in them. Goods get the lower rate only if they meet the agreement's rules of origin and the importer claims it with proof. The WTO counted 388 regional trade agreements in force on 1 October 2026.
How a claim works
- Check the goods originate under that agreement's rules — to get reduced or zero tariffs, products must comply with its specific rules of origin.
- Hold the proof the agreement names, because customs in the importing country verifies the claim.
- Claim the preferential rate on the import declaration, and keep the records behind it.
The WTO treats any reciprocal trade agreement between two or more partners as a regional trade agreement, and counts at least 84 more in force but not yet notified to it. Under GATT Article XXIV, a free-trade area removes duties on substantially all the trade in products originating in its members.
Three agreements, three ways to prove origin
| Agreement | In force | Proof |
|---|---|---|
| USMCA — US, Mexico, Canada | 1 July 2020 | No set form: any format with the nine minimum data elements |
| EU–Japan EPA | 1 February 2019 | Proof of origin, which EU customs verifies |
| India–UAE CEPA | 1 May 2022 | Certificates of origin — 4.45 lakh issued by July 2026 |
Under the India–UAE CEPA, the UAE removed duty on 97.4% of its tariff lines, covering 99% of its imports from India, and India gave immediate duty elimination on over 80% of its lines. India's CAROTAR rules make the importer declare in the bill of entry that the goods qualify as originating, and keep the documents for at least five years.
Worked example: a CIF shipment into Dubai
CIF value USD 100,000 · standard duty 5% → USD 5,000 · same goods on a tariff line at 0% under the CEPA, origin proven → USD 0 · duty saved: USD 5,000Dubai's customs tariff is 5% of the CIF value (UAE Government portal). Whether a given line is at 0% depends on the CEPA schedule; the shipment is illustrative.
The mistake people make
Claiming the preference without the origin work behind it. The EU says that if goods turn out not to be entitled to preferential origin, the preference is refused and unpaid duty may be recovered; the US expects reasonable care, and India requires due diligence from the importer. A supplier's certificate does not replace checking the rule.
FAQ
Free trade agreement (FTA): common questions
- How many free trade agreements are there?
- The WTO counted 388 regional trade agreements in force as of 1 October 2026, with at least 84 more in force but not yet notified to it.
- Does USMCA need a certificate of origin?
- No set form. CBP says there is no required certificate of origin form for USMCA; any format works if it carries the nine minimum data elements in Annex 5-A.
- What happens if an FTA claim turns out wrong?
- The preference is refused and the duty can be recovered. In the EU, unpaid duty may be recovered after the fact; in India, CAROTAR requires the importer to keep origin records for at least five years.
Sources
- GATT 1947, Article XXIV — World Trade Organization
- Regional trade agreements — World Trade Organization, 1 October 2026
- Scope of RTAs — World Trade Organization
- Quick guide to working with rules of origin — Access2Markets, European Commission
- Proof of origin — European Commission, January 2026
- Preferential rules of origin — European Commission
- United States–Mexico–Canada Agreement — Office of the US Trade Representative
- USMCA — US Customs and Border Protection, 1 December 2025
- USMCA frequently asked questions — US Customs and Border Protection, 16 January 2025
- EU–Japan economic partnership agreement — European Commission
- India–UAE CEPA completes one year — Press Information Bureau, 1 May 2023
- India's exports in FY 2025–26 — Press Information Bureau, 28 July 2026
- CAROTAR 2020 — Central Board of Indirect Taxes and Customs
- New rules on origin claims — Press Information Bureau, 18 September 2020
- Clearing customs and paying customs duty — UAE Government portal
Related terms
- Rules of originTerm
- Certificate of originTerm
- HS codeTerm
- Bill of entryTerm
- GCC customs unionTerm
- Landed costTerm
On Traqo: Rules of origin — the tests goods must pass to claim the lower rate.
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