Rise of Free Trade Agreements Poses Specific Challenges

Companies that export goods to multiple countries must deal with mounting number of pacts.

Global trade is expected to grow by leaps and bounds in coming years. What’s already growing rapidly is the number of free trade agreements that companies have to keep track of when they’re importing or exporting goods.

There are more than 500 free trade agreements, and William Methenitis, global director of customs and international trade at Ernst & Young, said the pace at which new agreements are being put in place is accelerating. “It has picked up in the last five years,” he said. “In the last two or three years you’ve seen it grow quite a bit.”

William Methenitis of Ernst & YoungA product that’s manufactured in the U.S. with no imported parts qualifies for U.S. origin, said Methenitis, who's pictured at left. “But that’s not the real world of business. Companies are importing all over the place, and they’re trying to source the lowest-cost item.

Companies rely on technology to help them comply with free trade agreements, he said. “It’s very hard to do this manually if you’re making multiple products and they qualify for multiple free trade agreements.”

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