The proliferation of free trade agreements has created enormous sourcing opportunities for importers to save duty, lower costs and increase their profits. Congress recently added South Korea, Panama and Colombia to the list of countries with free trade agreements with the U.S.
In addition, the Andean Trade Preference Act and the Andean Trade Promotion and Drug Eradication Act, which had expired in February, were renewed until July 31, 2013, and provide one-way duty-free treatment for qualifying products from Colombia and Ecuador (to be used until the Colombian-U.S. FTA is implemented). The U.S. also is negotiating the Trans Pacific Partnership Agreement, which will open up trade in goods and services among the nine countries around the Pacific Rim: Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam and the U.S.
These trade preference programs are intended to boost U.S. exports and increase jobs. The policies behind them are linchpins of Obama administration trade policy, and will be touted in the upcoming presidential campaign.
The implementation of trade preference programs by Customs at the ports of entry, however, is another story.
Lack of message and, more importantly, training, by Washington to the field in what is and is not required to meet the requirements of these trade programs in many cases has effectively undermined intended benefits. The ad hoc administration of these programs at the port level leaves importers in a daze of uncertainty, with rules changing from week to week and from port to port. We can expect to see this problem coming to a head in 2012, either though some legislative initiative (possibly the pending Customs Reauthorization Act) or election-year pressure to resolve these bottlenecks to enable trade to flow as originally intended.
The next trend we can expect to see is the sourcing of labor-intensive manufacturing such as apparel away from China to other Southeast Asian countries, particularly Vietnam, Cambodia, Bangladesh and India. Continued pressure on China to stop suppressing the valuation of its currency is coming not just from the U.S., but also from Europe, as nations struggle to hold the eurozone together in the face of its own debt crisis.