CALGARY – With uncertainty surrounding the North American Free Trade Agreement (NAFTA) talks, Canadian small businesses need to start preparing – now – for what happens if the trade deal collapses, according to a new report from the Canada West Foundation.
A guide released today urges businesses to begin to prepare for what happens if the United States withdraws from NAFTA. It also shows how to navigate different tariff scenarios that could have an immediate impact on small businesses. Regardless of what happen with NAFTA, doing the planning now will help businesses potentially find new trade opportunities and become more competitive, said co-author Carlo Dade, director of the Canada West Foundation’s Trade & Investment Centre.
“If the United States withdraws from NAFTA, we will be in new legal and political territory, marked by uncertainty and confusion. Coming up with a strategy now, rather than waiting for the confusion that would follow a U.S. withdrawal, is only prudent,” said Dade.
The guide, The ‘Just in Case’ Plan: How western Canadian small businesses can prepare for the potential end of NAFTA, examines four potential U.S. withdrawal scenarios and associated tariff changes, including what happens if:
• NAFTA remains
• Canada-U.S. Free Trade Agreement (FTA) is resurrected
• World Trade Organization (WTO) tariff rules take over
• Higher than World Trade Organization tariffs are imposed
The guide uses examples of three fictional companies that work through the range of tariff outcomes for different imports and exports, with some surprising results. No matter what happens with NAFTA talks, it is crucial that businesses get informed, reach out to partners and customers in the U.S. and Mexico to discuss strategy, and connect with provincial, federal and other trade resources to answer specific questions, Christensen said.
“Now is not the time to panic – it is the time to prepare,” said co-author Naomi Christensen, senior policy analyst at the Foundation. “Understanding the scenarios likely to unfold if the U.S. leaves NAFTA is crucial to being prepared. There are also measures to facilitate trade that exist outside of NAFTA that will most likely not be affected by a U.S. withdrawal.”
“The same steps businesses take to figure out what to do in case of a U.S. withdrawal also provide insights into how to save money by taking advantage of new trade agreements such as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the Trans-Pacific Partnership (TPP),” said Dade.
“By planning now, if the U.S. does withdraw, businesses can prepare. If NAFTA remains intact, businesses may still have new strategies that can boost their bottom line,” he said.