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USMCA passage will benefit small businesses

July 14, 2019

By Brian Calley
Published in Crain’s Detroit Business

Small businesses are a huge part of international trade across the North American continent. For this week’s Letter from the President, I wanted to share an op-ed I penned for Crain’s Detroit Business on the passage of the USMAC.

When I was Lieutenant Governor of Michigan, I saw firsthand the importance of trade with our North American neighbors. Trade deals such as the North American Free Trade Agreement (NAFTA) have opened up markets, supported hundreds of thousands of jobs, and made Michigan’s economy stronger and more diversified. 

In 2017, 338,300 jobs in our state were supported by trade with Canada and Mexico. In the same year, $39.1 billion in Michigan goods and services were exported under NAFTA. Free trade with our neighbors has allowed our auto industry to compete better with China using North American supply chains, including many Michigan small businesses. It increased innovation, productivity and improved American auto competitiveness. Our agricultural sector has also thrived with free trade, with Michigan farms accounting for almost $1.1 billion in exports yearly.

Now, as the president of the Small Business Association of Michigan, I have heard from our members how free trade has been absolutely vital to the wellbeing and long term success of their businesses. Under NAFTA, small businesses all across this country have seen incredible growth and greater opportunities to expand. 75.4% of exporters to Canada and 72.7% of exporters to Mexico have fewer than 50 employees.

The number of exporting firms has also shot up dramatically since NAFTA’s ratification – an 81.4% increase to Canada, and a staggering 365.5% percent increase to Mexico. This increase has been a growth engine for small businesses who now have access to these incredibly profitable export markets. Here in Michigan, where our small businesses employ about half of the state workforce, small business growth drives a thriving economy for all workers and employers.

It is vital to our state and to our small businesses that free trade remain uninhibited. Which is why Congress needs to pass the United States-Mexico-Canada Agreement (USMCA) so that we can maintain the trilateral deal and build upon the success started with NAFTA. This new deal modernizes NAFTA through market expansion and the inclusion of provisions designed to help businesses, including small businesses, compete in the 21st century economy.

The USMCA includes the first small business-specific chapter in a U.S. trade agreement. It establishes a small business committee comprised of government officials from each country that assists small businesses in boosting their exports and reaching new markets. The new deal also cuts red tape at the border, decreasing costs and streamlining paperwork that often hurts small businesses as they don’t have the manpower to navigate through the complex regulations.

The agreement will also enforce new intellectual property provisions that will bolster innovation and support small businesses engaging in digital trade. Strengthening intellectual property protection is vital for small businesses, as they produce 16 times more patents per employee than the average large firm. And new e-commerce rules prevent tariffs on digital products and raise the minimum cost of shipments subject to taxes through online sales. This will allow Michigan small businesses to fully participate in our increasingly digital 21st century economy.

I strongly urge Congress to pass USMCA. Small businesses in Michigan and around the country rely on free trade for their livelihood, and they eagerly await the additional growth opportunities that the agreement will bring. 

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