Small Business Leaders Praise Potential Mexico Trade Deal

Small Business Leaders Praise Potential Revised NAFTA Agreement

In a phone conversation with Mexico’s President Enrique Peña Nieto, U.S. President Donald Trump announced an agreement to revise the North American Free Trade Agreement (NAFTA).

A Revised NAFTA Agreement

The Small Business & Entrepreneurship Council (SBE Council) was quick to point out the positives about this agreement as well as the remaining challenges, including bringing Canada in as part of a trilateral agreement.

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According to the SBE Council, small to medium-sized businesses dominate trade with Mexico and Canada. And while improving the 25-year-old NAFTA agreement with Mexico is more than welcomed, it will be that much better with the three countries, especially for small businesses.

In a statement about the new agreement, SBE Council President and CEO Karen Kerrigan, stressed there are realities of business in the 21st century which needed to be addressed by modernizing NAFTA.

“There are positives — such as intellectual property protections and modern rules that govern digital trade — and what could be challenges, such as complex content requirements and labor/wage rules that may raise costs for small businesses and set a precedent for other trade agreements,” said Kerrigan.

As for President Trump, he first wants to remove any negative connotations associated with NAFTA before moving on to the new agreement by changing the name. In a video posted on the official White House website, Trump said, “We’re going to call it the United States-Mexico Trade Agreement.”

Small Business Deals

Efforts to overhaul NAFTA started a year ago and one of the more notable changes grabbing headlines has to do with manufactured parts in the automotive industry. Moving forward, 75% of automotive content will be produced within the trade block, this is up from the 62.5% which is currently required.

Additionally, 40 to 45 percent of the manufactured items have to be made by workers who will earn a minimum of $16 an hour.

This is important for small businesses because according to the 2017 American Automotive Policy Council (AAPC) report (PDF), they make up a large percentage of the industry.

The AAPC says there are more than 5,600 auto parts suppliers in the US and around two-thirds of every vehicle’s parts are produced by suppliers.

Insisting the number of parts produced come from the block pushes out part makers in China and other countries with lower wages and unregulated labor laws.

This is just one of the examples of how a better-negotiated trade agreement can deliver for small businesses by keeping manufacturing jobs in the US as well as Mexico, and eventually Canada.

The Value of Canada and Mexico

Canada and Mexico are the second and third largest trade partners with the United States respectively. According to the Office of the U.S. Trade Representative, U.S. goods and services trade with Canada totaled an estimated $673.1 billion in 2017, with a $17.1 billion goods deficit.

When it comes to Mexico, U.S. goods and services totaled an estimated $615.9 billion in 2017 with a $71 billion goods deficit.

Suffice it to say these two countries are extremely important to the US economy because they also account for millions of jobs in the country.

To put it in context, China is the number one trading partner but the deficit is a whopping $375+ billion.


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Michael Guta Michael Guta is the Assistant Editor at Small Business Trends and currently manages its East African editorial team. Michael brings with him many years of content experience in the digital ecosystem covering a wide range of industries. He holds a B.S. in Information Communication Technology, with an emphasis in Technology Management.

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