May is Small Business Month, and it’s a great time to celebrate the contributions of small businesses to the global economy. If you are a small business owner involved in import-export, taking advantage of preferential trade programs can help your business to thrive.

The term “preferential trade program” in the broadest sense includes any trading arrangement between two or more countries that extends trade benefits and from which other countries are excluded. Two broad categories exist – 1) Free Trade Agreements (FTAs) and 2) Trade Preference Programs. While complying with the rules can be challenging, when seeking to enter a new market it makes sense to first explore countries where your goods or services can gain preferred access.

Free Trade Agreements 

At last check of the WTO database on these agreements, there were 356 Free Trade Agreements (FTAs) or Regional Trade Agreements (RTAs) in existence among WTO members. The U.S. has entered into FTAs with twenty (20) countries. The European Union has a more extensive network of trade agreements, which include Economic Partnership Agreements (EPAs) with former colonies. The European Union is itself the result of a complex set of trade agreements which have created the world’s largest single market area providing borderless trade among its 27 members. Other countries are working towards their own regional blocs. These include the African Continental Free Trade Area (AfCFTA), the Association of Southeast Asian Nations (ASEAN) , the Central American Common Market (CACM), and the Caribbean Community Single Market. Mature and effective FTAs/RTAs benefit traders because they create access to new markets, remove or lower tariffs, and smooth technical barriers to the entry of goods and services. 

Trade Preference Programs

Trade Preference programs are created by developed countries to unilaterally extend access into their markets for goods coming from developing countries. The developed country gets to choose the countries, the goods, and the criteria to be met to qualify for the program. Generalized System of Preference or GSP programs are the oldest and most known. The U.S. extends the African Growth & Opportunities Act (AGOA) to products from most African countries. The Caribbean Basin Initiative (CBI) comprising the Caribbean Basin Economic Recovery Act (CBERA), US-Caribbean Basin Trade Partnership Act (CBTPA) and special programs for Haiti provides access to the U.S. market for thousands of Caribbean products. Goods manufactured in qualified countries and exported to the US are eligible for duty-free treatment under these programs. As with FTAs/RTAs, duty-free entry can assist small businesses to be competitive by avoiding tariffs. These costs savings can then be passed onto consumers.

Effective use of preferential trade programs can assist small businesses to be competitive. It is important for small business owners to work with trade law practitioners who can help them navigate the complex world of international trade and ensure that they are in compliance with trade laws.

If you are a small business owner who wants to learn more about how these policies and trade laws can benefit your business, do not hesitate to reach out to us. We are here to help you navigate the complex world of international trade and ensure that your business is on the path to success. Contact us today to learn more.

Andrea Ewart

Andrea Ewart

I am a seasoned international trade and customs attorney, and policy adviser for various companies and governments with a demonstrated history of successfully developing and implementing sustainable and dynamic trade programs. I am experienced in creating partnerships with various business-support organizations to drive compliance and growth in the international market.