Which Of The Following Is True Of Free Trade Agreements

In addition to trade in goods, the new agreements often address other aspects, including the protection of intellectual property rights, trade in services, investment, public procurement and technical regulations. These are so-called “second generation agreements.” The signatories to a free trade agreement form a free trade area (for example. B Switzerland-EU). It is not a customs union, that is, the signatories of the agreement retain their own external tariffs. On the other hand, in the case of a customs union, there are only common external customs duties. Once the goods have crossed this line and reached the market, they can move freely between the different countries without any other tariffs. Examples of customs union: European Union or Swiss-Liechtenstein. Content of agreements The essential element of each agreement is trade in goods (including tariff reductions and other trade restrictions). They regulate trade in industrial products (SH chapters 25-97), fish and processed agricultural products. Trade in unprocessed agricultural products is generally governed by separate bilateral agricultural agreements. Together, these agreements mean that about half of all goods entering the United States enter duty-free, according to the government.

The average import duty for industrial products is 2%. The “factory starting price” is the price of goods, including the value of all primary materials used, paid to the manufacturer in whose final processing was carried out. Not all internal taxes that are refunded after the delivery of the goods (for example, are not included in the “operating price”. B VAT) as well as all costs incurred when the goods left the factory, for example. B for transportation and insurance. The objective of preferential origin is to make goods duty-free when exporting to a free trade agreement or to subject them to a reduced duty. This document is accompanied by a certificate of movement of goods or a declaration of country of origin on invoice. Compliance with non-preferential country of origin rules does not exempt goods from customs when imported into a third country – these country of origin rules only apply if the destination country requires a country of origin certificate for importation. This should not be confused with the issue of Swissness (“Made in Switzerland”), which is subject to another set of rules. This view became popular for the first time in 1817 by the economist David Ricardo in his book On the Principles of Political Economy and Taxation. He argued that free trade broadens diversity and reduces the prices of goods available in a nation, while making a better part of its own resources, knowledge and specialized skills. Free trade is an opportunity to open up another part of the world to local producers.

Implementation in the SME sector is often not given sufficient attention to free trade agreements and the origin statements of exporting firms. To determine the country of origin, it is necessary to coordinate the management of the company, the export department, procurement, quality assurance, logistics and finance. For example, if the purchasing service changes supplier due to lower prices (old countries of origin, Switzerland, new countries of origin, China and the third country), the export department must also be informed, as this could change the country of origin. Changes in prices and production or fluctuations in exchange rates may also affect the valuation of the country of origin.