What Are Preferential Treaties?
Preferential treaties, also known as free trade agreements (FTA), are agreements between two or more countries designed to promote trade by reducing or eliminating import duties on eligible products. These agreements can make it more cost-effective for merchants to sell products internationally, as long as specific criteria are met.
How Do Preferential Treaties Affect Your Duties and Taxes?
When preferential treaties are applied, you can benefit from lower or zero-duty rates, reducing overall import costs for your customers. However, if the requirements for a treaty are not met, duties will default to the most-favoured-nation (MFN) rate.
Key Features of the Duties and Taxes Settings
Shopify now allows merchants to toggle the use of preferential treaties within the duties and import taxes settings page. Here's how it works:
- Enable treaties if your products qualify and meet the necessary requirements to access reduced duty rates.
- Disable treaties if you are unable to meet the terms of these agreements, so the system defaults to the MFN duty rate.
Why Is This Important for Your Business?
Understanding how preferential treaties work gives you better control over how import duties are calculated at checkout. This ensures compliance with international trade regulations while potentially providing cost savings for both you and your customers.
Learn More
For detailed guidance on using the Duties and Import Taxes calculator and managing preferential treaty settings, visit the Shopify Help Center. Equip your business with the tools to streamline international selling effectively.