Top Free Trade Agreements (FTAs) Every North American Exporter Should Know When Doing Business in Latin America

Homero Herrera -

Published: January 23, 2025

Cover image by Cancillería del Ecuador from EcuadorCC BY-SA 2.0, via Wikimedia Commons

In today’s interconnected global economy, understanding and leveraging Free Trade Agreements (FTAs) can make the difference between success and stagnation for North American exporters looking to expand into Latin American markets. As international trade becomes increasingly complex, these agreements offer valuable opportunities to reduce costs, streamline operations, and gain competitive advantages in rapidly growing markets.

Why Free Trade Agreements Matter for Your Business

Free Trade Agreements serve as powerful tools for businesses looking to expand their international reach. These carefully negotiated treaties eliminate or significantly reduce tariffs, quotas, and other trade barriers between participating countries. For Canadian and U.S. exporters, FTAs can translate into:

  • Reduced or eliminated customs duties on qualified goods
  • Simplified customs procedures and documentation requirements
  • Enhanced intellectual property protection
  • Greater market access and competitive advantages
  • Increased certainty in cross-border transactions

Essential FTAs for North American Exporters

1. United States-Mexico-Canada Agreement (USMCA)

The successor to NAFTA, USMCA provides the foundation for trade across North America and creates opportunities for deeper market penetration into Mexico. Key benefits include:

  • Modernized customs and trade facilitation procedures
  • Enhanced protection for intellectual property rights
  • Updated digital trade provisions
  • Strengthened labor and environmental standards
The USMCA continues to be a key trade framework shaping North American commerce, facilitating over $1.5 trillion in annual trilateral trade while strengthening regional supply chains and market access.

2. CAFTA-DR (Dominican Republic-Central America FTA)

This agreement opens markets in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Notable advantages include:

  • Duty-free treatment for most U.S. and Canadian consumer and industrial products
  • Streamlined customs procedures
  • Enhanced transparency in government procurement
  • Strong protection for U.S. and Canadian investors

3. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

For Canadian exporters, the CPTPP offers preferential access to Chile and Peru, along with other Pacific Rim countries. Key benefits include:

  • Reduced tariffs on agricultural and industrial goods
  • Enhanced services market access
  • Improved investment protection
  • Modern digital trade provisions

4. Bilateral Agreements

Several bilateral agreements complement these larger trade frameworks:

Canada-Chile FTA

Signed in 1997, this was Canada’s first FTA with a South American country. It eliminates tariffs on 99% of goods, significantly benefiting industries like mining equipment, agricultural products, and technology services. As of 2022, bilateral trade reached $2.48B, showcasing its impact. Recent updates to the agreement include provisions for digital trade and environmental standards, ensuring continued relevance in modern markets.

U.S.-Colombia Trade Promotion Agreement

Enacted in 2012, this agreement provides duty-free access for over 80% of U.S. exports, with immediate benefits to sectors like agriculture (e.g., grains, pork, dairy), industrial machinery, and chemicals. U.S. exports to Colombia have grown by 27%, highlighting the agreement’s success. Streamlined customs procedures have further enhanced its attractiveness for exporters, including SMEs looking to penetrate the Colombian market.

Canada-Peru FTA

Effective since 2009, this FTA opened up opportunities in one of Latin America’s fastest-growing economies. Peru’s mining and agricultural sectors have been major draws for Canadian investment, while Canadian exporters benefit from reduced tariffs on key goods like machinery and fertilizers. In 2023, trade between the two countries reached $6.3 billion, a testament to the agreement’s efficacy.

Bilateral FTAs between North American and Latin American nations have created powerful trade partnerships, driving billions in commerce through improved market access.

By providing reduced trade barriers, improved market access, and logistical simplifications, these agreements empower North American exporters to expand their footprint in diverse and growing LATAM markets.

How to Leverage FTAs Effectively

Success in international trade requires more than just awareness of FTAs – it demands strategic implementation. Here’s how to maximize their benefits:

  1. Understand Rules of Origin Understanding and documenting compliance with rules of origin is crucial for claiming preferential tariff treatment. Work with experienced logistics partners who can help navigate these complex requirements.
  2. Maintain Proper Documentation Develop robust systems for maintaining documentation that proves your products qualify for FTA benefits. This includes certificates of origin, manufacturing records, and supplier declarations.
  3. Stay Current with Changes FTAs evolve through amendments and new interpretations. Partner with trade experts who monitor these changes and can help you adapt your compliance strategies accordingly.

Planning Your FTA Strategy

To maximize the benefits of Free Trade Agreements:

  1. Conduct a thorough analysis of your supply chain to identify FTA opportunities
  2. Invest in training your team on FTA compliance and documentation requirements
  3. Partner with experienced logistics providers who understand both the agreements and regional markets
  4. Regularly review and update your FTA strategy as agreements and business needs evolve

Looking Ahead

The landscape of international trade continues to evolve, with new agreements being negotiated and existing ones being modernized. Staying informed and adaptable is crucial for success in Latin American markets.

At Latin American Cargo, we specialize in helping North American businesses navigate the complexities of international trade and maximize the benefits of Free Trade Agreements. Our team of experts understands both the technical requirements of FTAs and the unique characteristics of Latin American markets.

What challenges have you encountered when trying to leverage Free Trade Agreements in your export operations? Connect with me on LinkedIn to share your experiences, or reach out to our team for personalized guidance on optimizing your international trade strategy.

About Latin American Cargo: As a specialized international freight forwarder, we combine deep expertise in Latin American markets with comprehensive understanding of Free Trade Agreements to help North American exporters succeed in international trade. Contact us to learn how we can support your business growth in Latin America.

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