As a small business owner, NAFTA is likely coming up more and more often in your thoughts these days. What is it about? What does it mean to Canada and what does it mean to your business? In particular, how would a “tweak” affect you and your business?
What is NAFTA?
NAFTA is the North American Free Trade Agreement which was signed over 20 years ago – well before many entrepreneurs were old enough to care or recognize it as relating to their business. In the first 5 years of NAFTA’s existence, the agreement had helped produce over 1.8 million new jobs for Canadians
What Does it Do?
While there was some controversy at the time, since its enactment, NAFTA has positively affected Canada by bringing strong economic growth, job creation, better prices and better selection in consumer goods through the reduction of tariffs and duties on products and services which flow across the Canada, U.S. and Mexican border. In fact 1 in 5 jobs in Canada are linked to international trade.
How Does NAFTA Impact My Business?
Canada has benefited more than any other nation from NAFTA. Canada’s GDP has grown at a faster rate than either Mexico’s or the U.S since 1994. If you export and import goods across any of the North American borders, you currently benefit from minimal tariffs and duties being assigned to your goods and services. If NAFTA was not in effect, or were to be “tweaked” too much, there could be tariffs on products imported and exported.
How Could A Tweak Affect My Business?
NAFTA’s major goal was to eliminate tariffs and barriers that would help reduce the taxes that are put on imported and exported goods. Canadian businesses take full advantage of the tariff elimination because they’re typically able to produce more for less. If NAFTA goes through any changes which result in increased tariffs or duties to Canadian goods and services going in and out of the U.S., there could be downstream impacts to small business and the Canadian economy and the U.S.
Free trade across North America has been extremely beneficial to all countries involved in the enactment of NAFTA. Therefore it stands to reason, that any tweaks will do more to improve the flow of goods and services and further reduce barriers to doing business across North America. While it may seem like an uncertain time for small business, history strongly favors Canadian businesses having the ability face challenges and thrive.