globaltaxnews.ey.comSign up for tax alert emailsPrintDownload

10 October 2023

EY Global Tax Controversy Flash Newsletter (Issue 63) | Free trade agreements provide opportunities for global businesses — but  may increase controversy risk

In today’s global economy, businesses continually seek to enhance efficiency, reduce costs and maintain a 
competitive edge. Free trade agreements (FTAs) are foundational to achieving these goals. FTAs reduce 
international trade barriers and facilitate the unrestricted flow of goods and services.  

Understanding FTAs and using them effectively is essential for international commerce. As supply chains 
shift in response to global disruptive events, businesses must keep abreast of FTA rules to qualify for 
these benefits. Failure to do so can increase the risk of unexpected duty costs, penalties for 
noncompliance and protracted disputes.  

Identifying FTA opportunities and complying with the rules is not always easy, given the volume and 
complexity of FTAs around the world. For example, Latin American countries are involved in more than 
100 FTAs, ranging from bilateral agreements between individual countries to more comprehensive 
multilateral agreements involving multiple nations. Qualifying conditions, such as rules of origin, vary 
between agreements, and the necessary documentation may be hard to obtain from third-party suppliers. 
Active management of the FTA process is crucial to harness their economic benefits and to avoid potential 
controversy with customs administrations.

Key actions include:  

Use data analytics to identify FTA opportunities.

  • Develop relationships with overseas suppliers.

  • Rigorously review origin to ensure products qualify for preferential rates.

  • Review the use of Harmonized Tariff Schedule (HTS) codes.

  • Strengthen internal compliance and documentation processes.

  • Engage with teams across the organization (such as sourcing, logistics, compliance and finance 

    departments) to identify opportunities and improve compliance.

  • Stay informed and continuously adapt to changes in the FTA landscape, including new 

    agreements, and changes to tax and customs regulations.  

    To read more about FTAs, read TradeWatch magazine from Ernst & Young LLP: https://www.ey.com/en_gl/global-trade?linkId=207238419

    Additional information and links to past newsletters can be found in the attached PDF.

    Flash Newsletter attachment (Issue 63)

    Document ID: 2023-5648

     
     

    The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

     

    Copyright © 2024, Ernst & Young LLP.

     

    All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

     

    Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

     

    "EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

     

    Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

     


    Cookie Settings

    This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


    Yes, I accept         Find out more