Trade Agreement Thresholds 2020: What You Need to Know
For businesses that engage in international trade, understanding trade agreement thresholds is essential. These thresholds determine the monetary limits under which a business can trade without being subject to certain trade agreements and regulations. As we enter 2020, it`s important to understand the current thresholds and what they mean for your business.
What Are Trade Agreement Thresholds?
Trade agreement thresholds are monetary limits set by international trade agreements. These limits determine the amount of a product that can be traded between countries without being subject to certain regulations or tariffs. For example, the World Trade Organization (WTO) sets threshold limits for government procurement contracts to ensure that businesses from all member countries have equal access to government contracts.
In addition to the WTO, other agreements such as the North American Free Trade Agreement (NAFTA), the Trans-Pacific Partnership (TPP), and the European Union (EU) have their own trade agreement thresholds.
Why Are Trade Agreement Thresholds Important?
Trade agreement thresholds are important because they determine the rules and regulations that govern international trade. If a business exceeds the threshold limit for a particular agreement, they may be subject to additional tariffs, taxes, or regulations that could impact their ability to compete in the global marketplace.
For example, if a business in the United States wants to sell goods to a business in Japan, they may be subject to import tariffs if the value of their goods exceeds the threshold set by the U.S.-Japan Trade Agreement. Similarly, if a business in Canada wants to bid on a government procurement contract in the United States, they may be subject to additional regulations if they exceed the threshold set by the NAFTA agreement.
What Are the Current Trade Agreement Thresholds for 2020?
The current trade agreement thresholds for 2020 vary by agreement. Here are some of the most important thresholds for businesses to be aware of:
– WTO Government Procurement Agreement: $182,000 USD for goods and services for most countries, $7.5 million USD for the United States
– TPP: No specific threshold limit, but tariffs will be lowered or eliminated for goods that meet certain requirements
– EU Procurement Directives: €139,000 EUR for goods and services for most entities, €214,000 EUR for certain entities such as hospitals and public transport services
– NAFTA: $25,000 CAD for goods and services for procurement contracts in Canada and the United States, $130,000 USD for procurement contracts in Mexico
It`s important to note that these thresholds can change over time as agreements are renegotiated or new agreements are established. Businesses that engage in international trade should stay informed about any updates to trade agreement thresholds that may impact their operations.
In conclusion, trade agreement thresholds are a critical component of international trade. Understanding these thresholds is essential for businesses that want to compete in the global marketplace and avoid potential penalties or regulations. The current thresholds for 2020 vary by agreement, and businesses should stay informed about any updates or changes that may impact their operations.