As the pandemic reveals the vulnerabilities in the global economy, a new opportunity emerges for small-business owners in the United States who plan to grow their business across the Canadian and Mexican borders with the United States-Mexico-Canada Agreement, or USMCA, which went into effect on July 1, 2020. But, many small businesses in the United States are still unaware of how this agreement benefits them.
Mexico and Canada are our two top export destinations and the majority of exporters to those countries have fewer than 50 employees. The new trade agreement comes at a critical time when most small businesses have been disproportionately impacted by the COVID-19 crisis and need innovative solutions to thrive in the new economy. What makes this trade deal vital is its focus on small-business exports, providing investors some level of certainty during these unprecedented times.
This highly anticipated trade deal is expected to increase demand for U.S.-made goods and services over years, boosting our GDP and adding more than 200,000 jobs directly connected to trade with our neighbors. However, the agreement is being treated like a “living agreement,” so overcoming the expected challenges among the countries will have to happen in order for it to truly be successful.
The new agreement is still great news for farmers, manufacturing firms and small businesses in the United States.
What do U.S. small-business owners need know about the USMCA trade deal?
For small businesses selling online, selling a product or service in Mexico and Canada has become easier, cost-efficient and more secure.
The new trade agreement implements innovative customs procedures to make it easier to send shipments across the border with less paperwork through a modernized process.
It has added new enforcement rules on counterfeit and pirated products to help protect intellectual property rights and trade secrets with enforceable provisions across borders.
Minimum shipment thresholds have been raised in Canada and Mexico to reduce formal entry procedures and boost cross-border trade with the United States. This means your international vendors may save time and money, which could result in lower costs to your company and lower delivery costs between borders.
The enactment of the USMCA during the COVID-19 crisis is timely because it streamlines selling to our neighboring countries at lower costs than selling overseas. This agreement is meant to increase trade with our neighbors who are closer in proximity, easier to collaborate with, and have minimal time-zone differences between markets. This means our connected supply chains can be more stable and, we hope, enable more opportunities for small businesses to exchange goods and services that will strengthen the local economies within each country.
EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.
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