A free trade agreement (FTA) is a treaty between two or more countries that reduces or eliminates tariffs and other trade barriers on goods and, in many cases, services. Goods that satisfy the agreement’s rules of origin can be imported at a preferential (often zero) duty rate instead of the standard most favored nation rate. Examples include the USMCA (United States, Mexico, Canada), the EU single market arrangements, and the CPTPP across the Pacific.
How it works
An FTA only lowers duty on goods that qualify. Qualification hinges on rules of origin, which decide whether a product counts as originating in a member country based on where it was made or how much local content or processing it contains. To claim the preferential rate at import, the buyer or importer usually needs proof of origin, such as a certificate of origin or a supplier declaration.
Why it matters for B2B quoting
For B2B sellers shipping across borders, tariffs are a real line item that changes the landed cost your buyer pays. If your goods qualify under an FTA, you can quote a lower delivered price than a competitor sourcing from a non member country. When you build a quote, it helps to flag whether duty is included, which agreement applies, and what documentation the buyer will receive, so there are no surprises at customs.
Example
A US wholesaler quoting a Canadian distributor on machined parts may cite a 0 percent duty rate under USMCA, provided the parts meet the regional value content threshold. The quote can note that a certificate of origin will accompany the shipment. That single detail can be the difference between winning and losing the order on price.
If you send cross border quotes, keeping origin and duty terms clear in each quote reduces disputes later. See the B2B quoting glossary for related terms like landed cost, Incoterms, and HS code.