Key Takeaways

• An FTA, or Free Trade Agreement, is an agreement between countries that helps reduce trade barriers. One of its key benefits is the reduction or elimination of import duties for goods that meet the relevant requirements.
• Shipping goods from an FTA member country does not automatically mean that the goods will qualify for a 0% duty rate. You must first check the HS Code, Tariff Schedule, and Rules of Origin under the relevant agreement.
• Country of Origin is not determined solely by the country from which goods are exported. You must check whether the goods were produced or processed in accordance with the applicable rules of origin.
• Claiming FTA benefits may require Proof of Origin, such as a Certificate of Origin or a declaration in the format specified by the agreement.
• Before importing or exporting, compare the normal duty rate with the FTA rate. Some tariff lines already have a 0% normal duty rate, so preparing FTA documents may not provide additional benefits for every shipment.

Importing goods from overseas involves more than just

Product Price + Freight Cost

Another important cost is import duty.

Some products may be subject to customs duties amounting to several percent of their Customs Value, significantly increasing the Landed Cost.

One legitimate way for businesses to reduce this cost is to use benefits available under an FTA.

However, one common misconception among business operators is:

“Buying goods from a country that has an FTA with Thailand means no taxes are payable.”

In reality, several conditions must still be checked before the benefits can be claimed.

What Is an FTA?

FTA stands for

Free Trade Agreement

An FTA is a free trade agreement between

• Two countries
• A group of countries
• Or multiple countries

It aims to reduce trade barriers between its members.

One key measure is the reduction or elimination of

Customs Duty

for goods that meet the applicable requirements.

Some FTAs also cover other areas, such as

• Trade in Services
• Investment
• Customs Facilitation
• Intellectual Property
• E-commerce
• Government Procurement
• Technical Standards

The scope depends on the specific agreement.

How Can an FTA Reduce Import Costs?

Suppose a product has a

Normal Duty Rate of 10%

If the product qualifies under an FTA, its Preferential Rate may be reduced to

5%

or

0%

according to the agreement's Tariff Schedule.

If the Customs Value is

THB 1,000,000

Normal duty at 10%

=

THB 100,000

If the FTA rate is 0%, the duty cost can be reduced by up to

THB 100,000

before considering other taxes or expenses.

This demonstrates that an FTA can directly affect a business's Landed Cost.

Does an FTA Mean That All Products Have a 0% Duty Rate?

No.

This is one of the most common misconceptions.

Even when two countries share an FTA, different HS Codes may have

• A 0% rate
• A partially reduced rate
• A phased tariff-reduction schedule
• Quotas
• Special Safeguard measures
• Exclusions

Therefore, you must check the Tariff Schedule for the product's tariff classification.

You should not conclude that

“This country has an FTA with Thailand, so no duty is payable.”

What Should You Check Before Using an FTA?

Before claiming FTA benefits, check at least these four points:

• Whether an FTA applicable to the transaction is in force between the exporting and importing countries
• The product's HS Code
• Whether the product meets the Rules of Origin
• Whether valid Proof of Origin is available

If any of these requirements is not met, the product may not qualify for the Preferential Tariff.

Are the Country of Export and Country of Origin the Same?

Not necessarily.

For example,

A Thai company purchases goods in Singapore.

However, the goods were manufactured in China and then stored in a warehouse in Singapore.

They are subsequently shipped to Thailand.

In this case,

Country of Export = Singapore

but

Country of Origin may still be China

Exporting goods from an FTA member country does not automatically change their origin.

What Are Rules of Origin?

Rules of Origin are the criteria used to determine whether goods

genuinely originate in an FTA member country

Without Rules of Origin, goods could be manufactured in a non-member country and simply routed through a member country to claim preferential tariff treatment.

FTAs therefore establish origin criteria to prevent this practice.

Is It Easier for Goods Produced Entirely in One Country to Qualify for an FTA?

Some products may qualify as

Wholly Obtained or Wholly Produced

when they are obtained or produced entirely within a member country, in accordance with the agreement's requirements.

Examples that may fall under this concept include

• Plants grown and harvested in that country
• Animals born and raised in that country
• Minerals extracted in that country

However, the details must be checked against the Rules of Origin of the specific FTA.

Can Goods Made with Materials from Multiple Countries Still Qualify for an FTA?

Possibly.

Many manufactured products use materials sourced from more than one country.

FTAs therefore establish rules for goods that use

Non-originating Materials

These rules may use criteria such as

• Regional Value Content
• Change in Tariff Classification
• Specific Manufacturing Process

or a combination of criteria, depending on the Product Specific Rules for each HS Code.

What Is Regional Value Content (RVC)?

RVC is a criterion used to assess the proportion of value generated within an FTA member country or region.

In general, the assessment may consider the relationship between

• The value of the product
• Originating materials
• Non-originating materials
• Production costs

However, the formula and minimum threshold may vary from one agreement to another.

You should not automatically apply the RVC percentage used in one FTA to another FTA.

What Is Change in Tariff Classification?

This criterion examines whether non-originating materials undergo a manufacturing process that changes their customs classification to the level required by the applicable rules.

Examples include

• Change in Chapter
• Change in Tariff Heading
• Change in Tariff Subheading

The applicable level depends on the Product Specific Rule.

The principle is that, in certain cases, if the manufacturing process is substantial enough to change the finished product's tariff classification as required, the product may qualify as originating under the agreement.

Why Is the HS Code Important for an FTA?

It is essential because the HS Code is linked to

• Tariff Rate
• Product Specific Rules
• Origin Criteria
• Import Regulation

If the classification is incorrect, this may result in

• Applying the wrong tariff rate
• Applying the wrong Rules of Origin
• Applying for an incorrect Certificate of Origin
• Retrospective assessment of customs duties

You should therefore verify the HS Code before preparing FTA documents.

Do not start by requesting a Form and only then look for the product's tariff classification.

Suggested Internal Link: What Is an HS Code? How to Identify Customs Tariff Classifications and Why They Matter for Import and Export Duties

What Is a Certificate of Origin?

A Certificate of Origin (C/O) is a document providing evidence of a product's origin.

However, there is more than one type of C/O.

At a general level, these can be divided into

Non-Preferential Certificate of Origin

This certifies the Country of Origin but is not used to reduce customs duties under an FTA.

Preferential Proof of Origin

This is used to claim tariff benefits under the relevant agreement.

The document and format used as Proof of Origin may vary depending on the FTA.

Suggested Internal Link: What Is a Certificate of Origin? Understanding Origin Documents for Imports and Exports

What Is Form D?

Form D is associated with claiming preferences under ASEAN trade in goods arrangements.

It is used to demonstrate the origin of goods that qualify for preferential treatment between ASEAN member countries under the applicable rules.

Today, many transactions between ASEAN member countries use the Electronic Form D system.

However, requirements and claim procedures must be checked against the destination country's requirements and the system applicable to the actual shipment.

What Is Form E?

Form E is a Proof of Origin associated with the ASEAN–China Free Trade Agreement.

It may be used to claim a Preferential Tariff for goods that meet the agreement's origin requirements.

However, the fact that goods are

shipped from China

does not mean that Form E can be used for every product.

The Product Specific Rule must be checked first.

If You Buy Goods from China and Have Form E, Are All Duties 0%?

No.

Form E does not make every HS Code eligible for a 0% rate.

You must check two separate matters:

Does the Product Meet the Rules of Origin?

And

What Is the Preferential Rate for That HS Code?

Some tariff lines may have a 0% rate.

Others may still be subject to customs duties or specific conditions.

You should check this before placing an order, rather than waiting until the cargo arrives in Thailand to ask whether Form E can be used.

What Is RCEP?

RCEP stands for

Regional Comprehensive Economic Partnership

It is a major free trade agreement of which Thailand is a member.

RCEP connects several countries across the Asia-Pacific region.

Businesses may need to determine which agreement should be used for a particular shipment, such as

• An ASEAN Agreement
• An ASEAN+1 FTA
• RCEP
• A Bilateral FTA

The applicable tariff rates and Rules of Origin may differ between agreements.

If Several FTAs Are Available, Which One Should You Use?

You do not necessarily need to choose the newest agreement.

Compare

• Preferential Tariff Rate
• Rules of Origin
• Documentation
• Supplier Capability
• Cumulation
• Operational Cost

For example,

The same product may qualify under both

FTA A

and

FTA B

However, FTA A may offer a 0% rate while FTA B offers 3%.

Alternatively, FTA B may have Rules of Origin that are easier for the supplier to meet.

You should therefore assess both

Tax Benefit + Compliance Cost

What Is the Difference Between an FTA and RCEP?

RCEP is itself an FTA.

FTA is a broad term for a Free Trade Agreement.

RCEP is the name of a specific agreement.

Like other agreements, it has its own name and rules.

Therefore, it is not accurate to say

“Should we use an FTA or RCEP?”

as if they were entirely different categories.

A more accurate question is

“Which FTA should we claim benefits under, such as RCEP or another agreement?”

Does Thailand Have FTAs with Every Country?

No.

Before importing or exporting, check whether

Thailand + Trading Partner

have an agreement that is currently in force.

Examples of agreements available to Thailand include arrangements within ASEAN and agreements with several trading partners across the Asia-Pacific region.

However, some important markets do not currently have an FTA in force with Thailand, while others may still be negotiating one.

Do not make assumptions based on geography alone.

Can the Thailand–EU FTA Already Be Used to Reduce Duties?

Do not claim benefits based on expectations or news about negotiations.

If an agreement has not entered into force, preferential tariffs under that agreement cannot yet be claimed.

Businesses importing from or exporting to the EU should therefore verify the current agreement status whenever preparing long-term cost estimates.

Does Thailand Have an FTA with the USA?

Do not assume that goods traded between Thailand and the United States can automatically use a bilateral FTA to reduce duties.

When calculating US import duties, check

• HTSUS
• Country of Origin
• Trade Program
• Product-specific Measure

under the rules currently in force.

Suggested Internal Link: What You Need to Know About Importing to and Exporting from the USA: Transportation, Duties, Documents, and Precautions

Can an FTA Reduce VAT as Well?

In general, the main tax benefit businesses refer to under an FTA is

Customs Duty

This does not mean that VAT is automatically eliminated.

For example, when importing into Thailand, even if the FTA duty rate is 0%, the shipment may still be subject to

Import VAT

under Thai law.

You should distinguish between

• Customs Duty
• VAT
• Excise Tax
• Other Tax

If the Normal Duty Rate Is Already 0%, Do You Need to Use an FTA?

It may not be necessary for the purpose of reducing Customs Duty.

For example,

Normal Duty = 0%

FTA Duty = 0%

Obtaining Proof of Origin may not generate any additional duty savings.

Businesses should compare the figures first to determine

whether the FTA actually saves money

This helps avoid additional work for suppliers or documentation teams when there is no tax benefit.

However, Origin Documentation may still be required for other reasons under a particular transaction or regulation, so the specific circumstances must be considered.

Is It Worth Using an FTA if It Reduces Duty from 5% to 0%?

It depends on the product value and the cost of preparing the documents.

For example,

Customs Value = THB 2,000,000

Normal Duty = 5%

Normal duty = THB 100,000

FTA = 0%

Potential Duty Saving = THB 100,000

In this case, preparing Origin Documentation can have a clear impact on costs.

However, if the shipment value is very low and the duty difference is small, the business may also need to consider the additional Administrative Cost.

Is Proof of Origin Required for Every Shipment?

It depends on

• The FTA
• The Shipment
• The Import Procedure
• The Value
• The Origin System

Depending on the agreement, the required document may be

• A Certificate of Origin
• An Electronic Certificate
• A Declaration of Origin
• An Origin Declaration by an Approved / Certified Exporter

You should not assume that every FTA requires the same paper “Form.”

What Is Self-Certification?

Some FTAs allow eligible businesses to certify origin through a declaration under the prescribed system, instead of obtaining a certificate from an issuing authority for every shipment.

This is generally referred to as

Self-Certification

However, this does not mean that every exporter can immediately write an origin declaration on their own.

You must check the following under the relevant agreement:

• Eligibility
• Registration
• Required Statement
• Supporting Records

If a Supplier Says “Made in China,” Does That Mean Form E Can Be Used?

Not necessarily.

“Made in China” on a product or package is one piece of information about origin.

To claim a Preferential Tariff, however, the goods must be substantiated under the agreement's Rules of Origin.

Ask the supplier to check the following before issuing Proof of Origin:

• HS Code
• Product Specific Rule
• Manufacturing Process
• Raw Material Origin

Can Goods Purchased Through a Trading Company Qualify for an FTA?

Possibly.

However, the transaction structure must meet the agreement's requirements.

Check

• Manufacturer
• Exporter
• Invoice
• Origin Document
• Third-party Invoicing
• Direct Consignment / Transport Rule

under the relevant agreement.

Having a Trading Company between the manufacturer and importer does not automatically disqualify goods from FTA benefits in every case, but the documents must comply with the applicable requirements.

What Is a Third-party Invoice?

This is a situation in which the commercial invoice is issued by a company that is not located in the country of manufacture. For example,

The goods originate in China,

but the invoice is issued by a Trading Company in Singapore.

Some agreements permit Third-party Invoicing subject to specified conditions.

You should therefore inform the supplier and Customs Broker of the invoice structure before the C/O is issued.

Why Is Direct Consignment Important?

Some FTAs contain requirements concerning the transportation of goods from the country of origin to the importing country.

If the goods transit through a third country, you may need to prove that

• The goods were not altered
• They remained under Customs Control, where required
• Supporting Transport Documents are available

according to the agreement's rules.

Therefore, the route can affect FTA Documentation; the manufacturing location is not the only factor.

Will Changing the Shipping Route Cause You to Lose FTA Benefits?

Not necessarily.

Transshipment through a third country can occur in international transportation.

However, you must check the relevant FTA's requirements concerning

• Transport
• Non-manipulation
• Customs Control
• Documentation

Inform the party preparing the Origin Document of the actual route.

Can a Certificate of Origin Be Issued After Shipment?

It depends on the agreement.

Some agreements have procedures for

• Issued Retroactively
• Retrospective Issuance

subject to certain conditions.

However, you should not routinely plan to have the supplier issue documents retroactively.

The best approach is to prepare the necessary information before shipment so that the documents are ready for Customs Clearance.

What Happens if FTA Documents Are Incorrect?

Customs may

• Refuse the Preferential Rate
• Assess the normal customs duty
• Request additional documents
• Verify Origin
• Assess additional taxes retrospectively, where applicable

Common errors include

• Incorrect HS Code
• Incorrect Invoice Number
• Inconsistent Product Description
• Incorrect Origin Criteria
• Mismatched Quantity
• Incorrect Country Information

You should therefore check the documents before the cargo arrives.

Can Customs Conduct Retrospective FTA Checks?

Verification of Origin may be conducted under the procedures of the relevant agreement and applicable customs laws.

Importers should retain supporting documents, such as

• Commercial Invoice
• Packing List
• C/O or Proof of Origin
• Import Declaration
• Supplier Information
• Supporting Origin Records, as required

An FTA should not be treated as a one-time document used to clear customs and then discarded.

What Is the Difference Between an FTA and a Certificate of Origin?

An FTA is a

trade agreement between countries

A Certificate of Origin is

evidence of a product's origin

A C/O is therefore one type of document that may be used to claim benefits under an FTA, but the two terms do not mean the same thing.

Can Form D, Form E, and a C/O Be Used Interchangeably?

They should not be used interchangeably without checking the applicable requirements.

Each document is associated with a different agreement or purpose.

For example,

• Form D → ASEAN
• Form E → ASEAN–China
• General C/O → May be non-preferential
• Proof of Origin under RCEP → Must comply with RCEP Rules

You must identify the agreement under which you intend to claim benefits.

Suggested Internal Link: What Are Form A, Form D, and Form E? How to Claim Import and Export Duty Preferences

Why Is an FTA Important to Exporters?

Exporters who understand FTAs can improve their competitiveness.

For example,

A Thai exporter sells goods to a trading partner.

If the Thai goods qualify for Preferential Duty, the buyer may have a lower import cost than when purchasing goods from a country that does not qualify for the same preference.

FTA benefits can therefore be one source of competitive advantage.

However, they should be assessed together with

• Product Price
• Freight
• Lead Time
• Product Quality
• Market Regulation

rather than relying on tariffs alone.

Why Is an FTA Important to Importers?

Importers can use FTAs to reduce Landed Cost when their goods qualify.

Before placing an order, ask the supplier

• What is the product's Country of Origin?
• Does the product qualify for an FTA?
• Can the supplier issue Proof of Origin?
• Is there a fee for issuing the document?
• How long will the documentation process take?

Do not wait until the goods have left the exporting country to request a C/O, as this may make the process more complicated.

Steps to Check Whether Goods Qualify for an FTA

Step 1: Identify the HS Code

Classify the product correctly first.

Step 2: Check the Country Pair

Determine whether an FTA in force applies between the country of origin and the destination country.

Step 3: Check the Normal Duty Rate

Identify the normal customs duty rate first.

Step 4: Check the Preferential Duty Rate

Determine how much the FTA reduces the rate.

Step 5: Check the Rules of Origin

Review the Product Specific Rule for the HS Code.

Step 6: Check with the Supplier

Ask whether the supplier can substantiate the product's origin.

Step 7: Select the Proof of Origin

Check whether the required document is a

• Certificate
• Electronic Certificate
• Declaration

Step 8: Check the Documents Before Shipment

Ensure that the information matches the Commercial Documents.

Step 9: Claim the Preference at Importation

Submit the Import Declaration and claim the Preferential Tariff according to the applicable procedure.

Step 10: Retain the Documents

Keep the records for Verification or Audit for the period required by applicable laws and the agreement.

Example 1: Importing Goods from China

A Thai company purchases goods originating in China.

It should check

• HS Code
• Normal Duty
• ASEAN–China FTA
• RCEP
• Rules of Origin

Then compare which agreement offers the relevant benefit and which Proof of Origin the supplier can issue.

Do not instruct the supplier to

“Provide Form E for every shipment”

without checking the tariff first.

Example 2: Importing Goods from Japan

Goods originating in Japan may fall under more than one FTA framework relevant to Thailand.

The importer should compare

• Tariff
• Origin Rule
• Documentation

to select the agreement most suitable for the product.

The same agreement does not necessarily have to be used for every product.

Example 3: Importing from Singapore When the Goods Originate in China

If the goods are only

• Stored
• Repacked
• Re-exported

from Singapore,

their origin may still be China.

Eligibility must therefore be assessed based on the actual origin, not just the Country of Export.

Example 4: Goods from an FTA Country with a 0% Normal Duty Rate

If the Normal Rate = 0%

and the FTA Rate = 0%,

FTA documentation may not provide any additional Customs Duty savings.

Businesses should check the benefits before adding documentation steps.

Information to Prepare Before Checking FTA Eligibility

Prepare the following information:

• Product Name
• Product Description
• HS Code
• Material
• Composition
• Function
• Country of Origin
• Manufacturer
• Exporting Country
• Importing Country
• Product Value
• Invoice Structure
• Manufacturing Information
• Supplier Confirmation

For products made from multiple materials, a BOM or Cost Structure may be required depending on the Origin Rule.

Common Mistakes When Using FTAs

• Assuming that all products have a 0% duty rate because an FTA exists
• Using the exporting country instead of the Country of Origin
• Looking for a Form before identifying the HS Code
• Using the wrong HS Code
• Failing to check the Product Specific Rule
• Assuming that a supplier's “Made in” label from a member country automatically qualifies the goods for an FTA
• Using Form D, Form E, and a general C/O interchangeably
• Failing to check the Normal Duty Rate before preparing FTA documents
• Ignoring Route / Transit Requirements
• Requesting documents after the goods have shipped
• Having inconsistent information between the Invoice and C/O
• Assuming that an FTA also exempts VAT
• Failing to retain documents after Import Clearance
• Using tariff rates from previous years without checking the Current Tariff

Checklist Before Claiming FTA Benefits

Before shipment, check whether

• The HS Code is correct
• The Country of Origin is identified
• An FTA exists between the countries
• The agreement is in force
• The Normal Duty Rate is known
• The FTA Duty Rate is known
• The potential duty savings have been calculated
• The Product Specific Rule has been identified
• The supplier can meet the Origin Requirements
• The correct type of Proof of Origin has been selected
• The Invoice Structure is correct
• The route involves a transit country
• All documents are consistent
• The importer is ready to claim the preference

Frequently Asked Questions About FTAs (FAQ)

What Is an FTA?

An FTA, or Free Trade Agreement, is a trade agreement between countries or groups of countries that helps reduce trade barriers, including through the reduction or elimination of import duties on qualifying goods.

Does Having an FTA Mean That All Products Have a 0% Import Duty Rate?

No. You must check the product's HS Code, Tariff Schedule, and Rules of Origin first. FTA rates can differ between tariff lines.

Can Form E Be Used for Every Product from China?

No. The goods must meet the origin rules under the ASEAN–China FTA, and the Preferential Tariff for the HS Code must be checked first.

Can an FTA Reduce VAT?

In general, FTAs focus on Customs Duty preferences. They do not automatically eliminate Import VAT.

Does Having a Certificate of Origin Guarantee That FTA Benefits Can Be Claimed?

Not always. You must confirm that the document is valid Proof of Origin for the relevant agreement, that its details match the shipment, and that the goods actually meet the Rules of Origin.

Import, Export, and Customs Clearance Services with CPL INTER

CPL INTER provides international freight services, including

• Air Cargo
• Air Courier
• Sea Freight LCL
• Sea Freight FCL
• Road Freight
• Cross-border Transportation

along with related services such as

• Pickup
• Packing
• Shipping Documents
• Customs Clearance
• Warehousing
• Delivery

depending on the Service Scope of each shipment.

For shipments where FTA eligibility needs to be checked, prepare information before Booking, such as

• Product Name
• HS Code, if available
• Product Specification
• Country of Origin
• Country of Departure
• Destination Country
• Manufacturer
• Supplier
• Product Value
• Invoice
• Proof of Origin that the supplier can provide

This information helps assess whether an FTA affects the shipment's Import Cost and what additional documents should be prepared before the goods are shipped.

Tariff rates, the list of agreements, Rules of Origin, and Proof of Origin formats may change under applicable laws and agreements. Always verify the current requirements for the relevant HS Code and FTA before claiming preferential treatment.

Tel: 02-519-4426 / 091-519-4426
LINE: @cplinter

Written by: CPL Inter Logistics Operations Team, specialists in international freight transportation and customs clearance, with more than 15 years of experience and an internationally recognized ISO 9001:2015 quality management system.