December 20, 2014

Why is Free Trade Important to Small Businesses?

Global free trade for small businessWhy is free trade with Peru important to those of us in the United States?

As the National Manufacturers’ Association blog, ShopFloor.org, notes it is because the Peru free trade agreement “is likely to boost American jobs and help relations with an ally in a challenging region of the world.”

And amazingly, ShopFloor.org and the New York Times editorial position even agree on this one — that does not happen often.  :)

Also in agreement are the Administrator of the U.S. Small Business Administration, and the Small Business and Entrepreneurship Council.

Both came out with press releases lauding the U.S. House of Representatives’ passage of the Peru Free Trade bill yesterday and encouraging the Senate to pass the agreement.  They also encouraged passing similar agreements with Colombia, Panama and South Korea.

I have to confess to not having paid much attention to the Peru free trade bill, considering it more of a macro-economic, big-business issue.  Probably like some of you, I heard about it but thought, “Where’s the small business issue?”

However, as the SBA press release points out:

More than 81 percent of U.S. companies that export to Peru are small or medium-sized, accounting for $774 million in exports to Peru in 2005.

However, they do not have the same duty-free access that Peruvian companies have to the U.S. market. This agreement will improve market conditions for small business exporters to Peru by phasing out existing tariffs, providing a secure legal framework for investors and strengthening protection for intellectual property, workers and the environment. In addition, it solidifies the benefits of two-way free trade to both countries.

The topic of free trade is polarizing.  Contentious.  In fact, 132 Congressional representatives voted against the Peru bill, while 285 voted for it.  So you can see it was hardly a unanimous vote in Congress.

My view on free trade is that it is futile to try to hold back global commerce.  Cross-border trade “will out.”

Just look at the cultural and market trends around us:  communications have gotten dirt cheap;  shipping is faster and easier than ever;  the Internet and cultural exports such as TV, music and movies inch us ever closer to a global village.

Companies routinely set up operations in other countries and hire talent from other countries.  And stock ownership is traded regularly between countries (perhaps you have “international” mutual fund representation in your retirement plan?).

When you look at these trends, we have as much chance of holding back global trade as we do plugging a dam with a finger.  So we might as well make sure trade is as advantageous as possible to businesses.

But let’s hear your viewpoints.  Some of you are bound to disagree.  Is there a downside to free trade agreements?  Are free trade agreements good for small businesses?  Leave a comment below and tell us what you think.

4 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

4 Reactions

  1. Anita, gutsy post. You are dead solid perfect with respect to your conclusions. Economic reform breeds political reform. Therein lies the solution. Leveling the playing field with respect to global accounting rules, and the present value of foreign exchange eliminates the temptation of arbitrage opportunities.

  2. To break the barrie of worldwide business. Like people life, you can but not always restricted to some area.

  3. Importing and exporting has become a risky venture with sites like dhgate being chalked full of scheisters robbing good people’s savingsand never communicating again. When people begin looking into importing and exporting, they’re usually the first source of information found. Great read though.

  4. Here

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