FTA Preference Rules for Apparel: Understanding the Building Blocks Used in Tariff Shift Model Agreements

One of the key findings in USFIA's 2017 Benchmarking Survey is that many apparel brands and retailers do not take full advantage of the duty-free opportunities available through U.S. Free Trade Agreements (FTAs) and preference programs. With complex rules on textiles and apparel varying from agreement to agreement, it’s no surprise duty-free opportunities are underutilized--but they don't need to be!

Natalie Hanson, International Trade Analyst with the U.S. International Trade Commission (USITC), provides a conceptual overview of the preference rules for apparel found in a majority of U.S. FTAs. Of the 14 FTAs which the United States is a Party to, 12 rely on the tariff shift model for apparel goods. The apparel rules of each of these agreements utilize some combination of tariff shift, short supply, and/or Tariff Preference Levels (TPLs). This presentation will define these terms and examine current usage of each type of rule for U.S. imports of apparel under the following FTAs: Australia, Bahrain, CAFTA-DR, Chile, Colombia, Korea, Morocco, NAFTA, Oman, Panama, Peru, and Singapore.


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