By Schnarr, J.W. on January 14, 2018.
NAFTA situation could have implications
With the next round on talks between the U.S. and Canada over the North American Free Trade Agreement less than two weeks away, and with U.S. President Donald Trump signalling the U.S. may withdraw from the agreement, the message to local businesses is clear:
“Don’t panic,” said Trevor Lewington, CEO for Economic Development Lethbridge. “Things will be okay.”
But staying calm does not mean business owners should be sitting around waiting to see what happens next. Lewington said now is the time to be proactive.
“If your business does transactions across the border, you should be thinking about NAFTA and if it has implications to your business,” he said.
That advice was echoed by Carlo Dade, Director for Trade and Investment Policy with the Canada West Foundation.
The think tank has been working on a guide involving the four steps needed for local business to deal with a NAFTA disruption, with input from local groups such as EDL.
Understanding the situation is an important part of the process of navigating a potential world without NAFTA. Dade said there could be a lot of pieces in play moving forward.
“It’s going to get very confusing,” he said. “So just for your piece of mind, while you have some time, under a calm, more rational set of circumstances, do a bit of reading.
“That will stop you from panicking should things start to fall apart.”
It is also important for local business owners to figure out if they will actually have a problem without NAFTA.
Dade said an end on NAFTA would likely move trade to World Trade Organization Most Favoured Nation tariffs. MFN is an important agreement within the WTO which bars countries from using discriminatory trade practices.
Dade said comparisons can be made easily through some research or it can be done through a customs broker.
“You need to know whether your tariffs go from 0 under NAFTA to 0 under the WTO, or, (if there is a change in the tariff),” he said.
Armed with this information, business owners should talk to their U.S. customers and suppliers about any potential changes.
Finally, there is help out there for people who need it. Extensive work by the federal and provincial governments has been done on the issue, for example.
“Should you have problems with tariffs, you want to figure out now who is there to help you – and you may want to get on their mailing list so you get updates and bulletins ” said Dade.
“If Trump does withdraw, everyone who hasn’t heard this advice is going to be rushing to do it. These places are going to be swamped, so you want to think about doing this now.”
Karla Pyrch, Executive Director at the Lethbridge Chamber of Commerce, said Chambers of Commerce have been working throughout the U.S. and Canada to find ways to help their local businesses move through the uncertainty
“There has been lots of work through the Canadian Chambers of Commerce to make connections with communities in the U.S., and corresponding chambers down there, to express how that affects business on both sides of the borders,” she said.
Dade said trade tariffs are very specific, so businesses need to be careful to identify their specific product.
“If you send down cucumbers and pickles (for example), it’s a completely different regime for pickles in their raw form as opposed to those dipped in vinegar,” he said.
“If you are scared or worried about this, for a few hundred bucks, a customs broker should be able to do it for you.
“But if I can figure it out, then your average business owner can certainly figure it out.”
“For us, there are an awful lot of agriculture moving south of the border, where there’s a potential for tariffs and other things to take place,” said Lewington.
He noted food is one area that traditionally has low tariff rates due to high demand.
“I don’t think (an impact) would be hugely dramatic on us,” he said.
“The biggest concern right now is just the uncertainty.”
Ultimately, if NAFTA goes away, Dade said the numerous advantages shared with U.S./Canada trade – shared history and culture, proximity familiarity, established networks, etc. – will not suddenly disappear.
“You’re not going to go from being advantaged to disadvantaged,” he said. “You’re going to go from being advantaged to being in the same boat as pretty much everyone around the globe who is trading with the Americans.”
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