Many SMEs Unsure How To Benefit From New USMCA Trade Pact With Mexico And Canada

Many small and medium-sized enterprises (SMEs) across the country remain uncertain how the United States-Mexico-Canada Agreement (USMCA) will impact business, according to a new survey from DHL.

DHL's 2020 International Trade Impact and Outlook survey also found that optimism for doing business in North America was down. Only 30% of U.S. businesses said Canada and Mexico would be a central business focus in 2020, compared to 55% of respondents last year.

Eugene Laney, head of international government affairs for DHL Express USA, told FreightWaves that the survey was surprising since the USMCA "could bring significant benefits to U.S. businesses and their supply chains."

"Many SMEs don't understand how the USMCA will affect them," Laney told FreightWaves. "Remember some companies were afraid to use [the North American Free Trade Agreement]  because they felt like it was burdensome; that there was a lot of paperwork involved."

Freight forwarding giant DHL is one of the world's largest logistics companies, delivering 1.3 billion parcels per year. Other findings from the International Trade Impact and Outlook survey include:

• 42% of respondents said their business will be significantly or moderately impacted by the USMCA once it went into effect
• 35% said their business will not be impacted at all by USMCA
• 15% of businesses said they are taking a more aggressive approach on global trade this year
• 32% of respondents said Asia is the top priority region for business this year, despite the coronavirus originating in China
• 78% of respondents said the U.S. presidential candidate's view on international trade will affect the way they vote this election year 

The USMCA, which goes into force on July 1, includes new country of origin rules for raw materials, as well as new laws on digital trade, financial services, labor and other sectors.

Laney said many different kinds of companies could benefit from the new trade agreement, including new digital laws creating opportunities for e-commerce in Mexico.

"It could be anything, from a company that's supplying hammers, or smocks, or supplies and equipment to a manufacturer, to a company that's selling on Etsy, jewelry, paintings or purses, there's enormous opportunities, particularly in the growth of the middle class in Mexico to sell a lot of goods to consumers via e-commerce," Laney said.

Laney said there's also opportunities for SMEs to create new markets south of the border.

"It's also an opportunity for a lot of SMEs that have traditionally only sold to companies like Caterpillar or BMW, to also sell to other manufacturers that are living and working in Mexico," Laney said.

The coronavirus pandemic is also causing many SMEs (49%) to take a conservative approach to global trade in the near future, with 78% of respondents saying business revenues have decreased due to the coronavirus.

Laney said DHL is reaching out to its clients and SMEs with an engagement campaign on the USMCA. 

"There are still some companies that need to learn more about USMCA, and one of the things that DHL is doing is partnering with the U.S. Department of Commerce to create webinars and seminars," Laney said.

Laney added next year they hope more U.S. businesses are looking to expand internationally.

"We would like to see more companies saying that they're receiving a lot of benefits and they understand the importance of USMCA. We're working with the Trump administration to try to figure out a way to get more companies to sell their goods globally," Laney said.