Small companies on Long Island will have an easier time doing business with Canada and Mexico because of a free trade agreement that went into effect this summer, diplomats said Thursday.
The United States-Mexico-Canada Agreement, or USMCA, eases cross-border commerce for exporters and importers. It establishes a three-nation committee to address issues affecting small businesses and cuts the cost of selling goods and services to foreign buyers.
The USMCA updates the 26-year-old North American Free Trade Agreement, or NAFTA.
"There are no walls to doing business with Canada or Mexico," said Khawar Nasim, Canada’s top diplomat in New York State. "The USMCA is meant to facilitate trade by reducing red tape…It modernizes NAFTA for today’s economy," he said.
Nasim spoke to the Long Island Association’s international trade committee during a virtual event held in conjunction with the Long Island Hispanic Chamber of Commerce Inc. and Maple New York, a group that promotes commercial ties with Canada.
Nasim said the USMCA enables businesses to establish networks of suppliers in North America rather than in Asia and Europe. The latter were disrupted by the coronavirus, particularly in China, he said.
"We've learned during the COVID pandemic that we’re vulnerable in having a lot of our supply [of products] come from offshore," Nasim said. "We’re rethinking how we want to get our goods. It only makes sense to get your supplies in North America," he said.
Mexican diplomat Rita Vargas Torregrosa agreed, saying the pandemic had slowed the rate of increase in trade volume between the three nations.
"Trade is growing a little, not as it was growing last year," she said. "But the USMCA will support our countries to recover" from the global coronavirus-induced recession.
Vargas and others urged small businesses to include exporting in their comeback strategy.
Long Island firms sold about $20 billion in goods and services to foreign buyers last year, up from $15 billion in 2017, said John Costanzo, an East Norwich-based logistics consultant and Maple New York director, citing research by Farmingdale State College.
Exports constituted 9% of the region’s gross domestic product, the sum of all goods and services produced here.
Nearly 100,300 jobs in Nassau and Suffolk counties are tied to exports, the Farmingdale State research shows. That’s 7.4% of the region's nonfarm employment.
Canada and Mexico are the largest export markets for New York State businesses, said Catherine L. Muth, an officer with the U.S. Commercial Service, a division of the U.S. Department of Commerce. "The USMCA just builds on that already impressive trade relationship," she said.
SELLING TO THE WORLD
Value of exported goods: $1.4 billion
Value of exported services: $4.7 billion
Number of jobs tied to exports: 31,386
Value of exported goods: $4.2 billion
Value of exported services: $5.1 billion
Number of jobs tied to exports: 68,889
SOURCE: Professor Jing Betty Feng of Farmingdale State College