Hello, I'm Justin Hoffmann
with the International Trade Administration
of the U.S. Department of Commerce.
In today's video we're introducing an exciting new tool
to help companies take greater advantage
of the free trade agreements the United States has negotiated
with other countries.
This FTA Tariff Tool makes it easier to obtain tariff
and trade information, related to our trade agreements.
Hey Tory, can you help answer a question for me?
Sure! So a guy from a small Pennsylvania company called me
looking for some help.
He's interested in finding new markets in which
to export his product.
OK has he considered some
of our free trade agreement partners?
The United States has negotiated agreements
with some 17 countries that provide preferential access
to our goods into those markets.
Actually he is very interested in our FTA partner markets,
especially our FTA partners in Latin America,
but he's having a really hard time finding
out what the tariffs would be on his products.
I know what you mean.
It can be hard for companies, especially small companies,
to find out how their products are being treated
under the FTAs.
The tariff schedules alone are the size of phone books!
Exactly the problems that this exporter is having.
He has spent hours simply trying to find the tariffs
for his products before giving up and calling me.
Well, did you know about the new online FTA Tariff Tool?
It's a huge time saver and was designed just for this purpose.
A key advantage of this tool is that it allows exporters
to research potential new markets
for business development and expansion.
The tool's also useful from the perspective of researchers
who would like to gather more in-depth trade information.
Here, let me show it to you.
OK, let's figure out what tariffs this exporter will face
in some of the FTA partner markets.
Let's start with "What's My Tariff?"
What's one of the markets that he's interested in?
He mentioned Peru.
OK, let's start with Peru.
Second question, what is the HS code for his product?
I don't know what an HS code is.
OK, it stands for "Harmonized System".
It's a numeric code that identifies specific products
in countries' tariff schedules.
Depending on the country, the code can be as short as 6 digits
or as many as 12 digits.
Every country classifies products exactly the same
at the 4 and 6-digit level.
But some countries want to show more detail and create unique 8,
10, or even 12-digit codes.
I see, I still don't know what this HS code is.
OK, that's not a problem.
In fact most companies don't know what their HS codes is.
The database takes account of that
and provides this search function provided
through the Census Bureau, so you can start
with the products category and narrow it down.
Do you know what product he ships?
He makes lead-acid car batteries.
OK, let's start by searching for batteries.
I'm pretty sure car batteries are rechargeable.
And you said they were lead-acid, and for a car,
which has a piston-engine.
Yeah OK, so it looks like the HS code
for lead-acid car batteries is "8507.10"?
Yes that's correct.
Now let's enter that in the FTA Tariff Tool.
But this is in Spanish!
Yes, the tool incorporates the official tariff schedules
negotiated under the FTA,
in this case Peru's tariff schedule is in Spanish.
But, since we already verified the HS code,
we can be fairly confident that this is acurate.
OK, lets click for more detail.
Neat! Um, Tori what's a "staging basket"
and what's a "base rate"?
OK, in a free trade agreement, countries will negotiate
on how quickly or slowly they will draw back the tariffs.
In this case, Peru originally had a tariff of 12 percent.
That's the "base rate" -- and they'll reduce that tariff and
"stage" it back over 10 years -- hence a 10-year staging basket.
So, in 2011, the tariff Peru charges
under our FTA is 8.4 percent.
But then next year it will drop to 7.2 percent
and it will be completely eliminated by 2018.
Right! OK, What are these Rules of Origin links at the bottom
of the page refering to?
They link back up to the Rules of Origin text
in the original agreement and that determines whether
or not a product will qualify for preferential treatment.
They are also organized by the HS code.
OK, I saw on the main search page
that this tool also allows the tariffs the United States
charges on imports from FTA partners?
Yes, that's correct.
It'll provide the same information,
but just on products entering the United States as imports.
OK. You also mentioned that this tool could help exporters
in their market research and planning.
Yes! Thats correct, the United States has three trade
agreements that have concluded,
but have not yet been implemented.
With Korea, Panama, and Colombia, right?
Right. So, your business owner could look
and see how these product could be treated
under those agreements when they're implemented.
So, if we do a similar search, and say, choose Korea,
we will see that Korea currently charges an 8 percent tariff
on exports of U.S. car batteries.
But,this tariff will be eliminated immediately once the
agreement goes into effect.
That's really helpful.
OK, so businesses may not simply be interested
in just the tariffs.
The data base incorporates another application called the
Market Access Tool.
This goes a step further providing a blend
of tariff and trade statistics.
The tool's especially useful for providing a overview
of how specific sectors will be impacted by the various FTA's.
For example, a chemical exporter could learn more
about how Bahrain treats U.S. chemical exports.
They can choose exports, Baharain and chemicals.
So, under the U.S.-Bahrain FTA,
tariffs were immediately eliminated on 99 percent
of U.S. chemical exports to Bahrain?
That's correct.
And if you click on the staging category, you can see,
for example, which products are subject
to the longest tariff elimination period.
What does this part mean, "10-Years, Non-Linear?"
OK so, usually under trade agreements,
the tariffs are reduced every year
in equal amounts in a linear manner.
However, in some instances for sensitive products,
they'll be reduced in a non-linear manner,
with say small cuts in the first couple years,
followed by larger cuts in the last years
until it's completely eliminated.
So, in this example, the 5 percent tariff remains in effect
until it's completely eliminated in 2015.
I see -- that's helpful!
OK, another useful application of the database is through the
"FTA Snapshot" application.
It combines tariff and trade information, but it focuses
on gathering information on
and comparing the FTA partner markets.
Here let me show you.
OK, so if we take a look at the US chemicals exports to Peru,
the first page of results shows the chemicals' sector organized
by the tariff schedule chapter numbers.
Thats the first two digits.
You'll notice that for pharmaceuticals, Chapter 30,
the average tariff for all the pharmaceuticals was 12 percent,
and that was before the agreement went into effect.
Today, however, Peru's average pharmaceutical tariff is
1 percent.
And you'll also notice that U.S. exports
of pharmaceuticals have been steadily increasing
since the FTA went into effect.
You can even click on the chapter number
and get the same information at a more detailed level.
That's amazing.
Thanks so much for showing this to me.
Now I feel comfortable going back
to the small Pennsylvania business and explaining
that this tool can identify current and future FTA tariffs,
as well as provide market research.
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