Free trade agreements (FTAs) are formal arrangements between countries. Their purpose is to reduce or eliminate barriers to the exchange of goods and services; they do this in an assortment of ways, including lowering tariffs, creating straightforward customs procedures, and setting clear rules for business activity. FTAs also create more efficient and competitive markets. These agreements can aid in economic growth by creating better access to new markets, encouraging innovation, and lowering prices for consumers. They also give export businesses a higher level of predictability in the global marketplace, helping them make long-term investment decisions with confidence.
However, free trade agreements are often the subject of intense debate. Supporters of FTAs say that they boost economic progress and strengthen diplomatic connections, while critics complain that they can undermine local industries and contribute to job losses in certain situations. The impact of an FTA can vary greatly depending on a country’s economic structure, the industries involved, and how strongly the agreement is enforced. These agreements between countries are certainly capable of altering global commerce and national economies.
Today, we’re reviewing the free trade agreements the United States has with 20 countries. See if you’re surprised by some of the countries included here.
Key Points
- The United States has free trade agreements with some of its closest friends, but generally with economies that are far smaller than our own.
- Some of our major allies such as Japan, the UK, and the European Union, do not have free trade agreements with us because of numerous sticking points in the large and complex volume of trade we have with them.
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1. Australia
- Started: January 1, 2005
- U.S. President: George W. Bush
- Australia is one of the United States’ closest allies. The U.S. maintains a military base in Darwin on the northern coast.
2. Bahrain
- Started: Aug. 1, 2006
- U.S. President: George W. Bush
- This small oil-rich Persian Gulf country is a close ally and was helpful to the United States during the Gulf Wars.
3. Canada
- Started: July 1, 2020
- Replaced the North American Free Trade Agreement that started January 1, 1994
- U.S. President: Bill Clinton, Donald Trump
- Canada is a NATO ally and, along with Mexico, is one of the United States’ top two trading partners.
4. Chile
- Started: January 1, 2004.
- U.S. President: George W. Bush
- Chile is a generally stable and democratic U.S. ally in South America and a significant source of agricultural products.
5. Colombia
- Started: November 1, 2006
- U.S. President: George W. Bush
- Colombia and the United States partner closely in the war on drugs. It is also an important strategic counterweight to neighboring Venezuela, an American rival.
6. Costa Rica
- Started: January 1, 2009
- U.S. President: George W. Bush
- Known as the Switzerland of Central America, Costa Rica has no army, only a police force. It is a popular destination for Americans to vacation or retire abroad.
7. Dominican Republic
- Started: March 1, 2007
- U.S. President: George W. Bush
- Although it is located on the same island as Haiti, the Dominican Republic is markedly more prosperous.
8. El Salvador
- Started: March 1, 2006
- U.S. President: George W. Bush
- El Salvador has struggled with civil war and endemic drug gang violence. In recent years, its president has taken a harsh anti-crime stance and gotten a much better handle on the problem.
9. Guatemala
- Started: July 1, 2006
- U.S. President: George W. Bush
- Located on the southern border of Mexico, Guatemala is a significant source of undocumented immigrants migrating across the U.S. border. Free trade with Guatemala helps create jobs there so that fewer people will feel the need to look for a better life in the U.S.
10. Honduras
- Started: April 1, 2006
- U.S. President: George W. Bush
- Honduras is an American partner that was especially vital during the 1980s when the socialist Sandinista regime ruled neighboring Nicaragua. “Contra” rebels operated out of Honduras with the blessing and encouragement of the U.S.
11. Israel
- Started: September 1, 1985
- U.S. President: Ronald Reagan
- A free trade agreement with Israel was the first the United States entered in to with a foreign country. Ronald Reagan was a staunch supporter of Israel.
12. Jordan
- Started: December 17, 2001.
- U.S. President: George W. Bush
- Jordan is a moderate Arab country bordering Israel. It has been cooperative with Israel and the United States. A contingent of U.S. troops trains there.
13. Mexico
- Started: July 1, 2020
- Replaced the North American Free Trade Agreement that started January 1, 1994
- U.S. President: Bill Clinton, Donald Trump
- During his first administration, Donald Trump was critical of the North American Free Trade Agreement (NAFTA) and negotiated a new version of it to better protect American interests. This is the agreement that is currently in place.
14. Morocco
- Started: January 1, 2006.
- U.S. President: George W. Bush
- Morocco was the first country in the world to give diplomatic recognition to the United States, and our friendship treaty with them is the oldest American treaty that remains unbroken and in force today.
15. Nicaragua
- Started: April 1, 2006
- U.S. President: George W. Bush
- In 1990 the socialist Sandinista government was voted out of power in Nicaragua, which greatly improved relations with the United States and made a free trade agreement possible.
16. Oman
- Started: January 1, 2009
- U.S. President: George W. Bush
- This Persian Gulf country was a significant partner to the United States in the Gulf War. A free trade agreement with the United States was one of the rewards they got for their help.
17. Panama
- Started: July 11, 2007
- U.S. President: George W. Bush
- The U.S. helped Panama get its independence from Colombia. After building the Canal, the U.S. maintained a significant troop presence there. Stability and prosperity in Panama are important to keep trade freely flowing through the Panama Canal.
18. Peru
- Started: February 1, 2009
- U.S. President: George W. Bush
- Peru is a U.S. partner on the west coast of South America, along with Chile and Colombia. This gives the U.S. free trade with every country on the Pacific coast of North and South America except Ecuador.
19. Singapore
- Started: January 1, 2004
- U.S. President: George W. Bush
- This prosperous city-state at the tip of the Malay Peninsula is located at one of the world’s major sea traffic chokepoints.
20. South Korea
- Started: June 30, 2007
- U.S. President: George W. Bush
- The United States went to war to help South Korea maintain its independence during the North Korean invasion of 1950-53. Today about 24,000 American troops remain in the country to deter any future North Korean attack.
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