Firms face new global agreements.

In last year's presidential campaign one of the most heatedly debated issues was free trade and its ramifications on United States manufacturing. Advocates of globalization argued that free trade allowed United States manufacturers to penetrate previously untapped markets, as well as allowing domestic-based firms to take advantage of a seemingly unlimited foreign labor pool.

Anti-globalization forces bemoaned the loss of United States manufacturing jobs wrought by such changes. Yet while these two sides primarily squabbled over NAFFA, one can expect many more arguments in the future, as a deluge of new free trade agreements are in the pike, ones that will undoubtedly greatly affect the state of domestic manufacturing.

Currently, there are only six free trade agreements in place: Israel, NAFTA, Jordan, Chile, Singapore and Australia. Yet this number is certain to increase exponentially in the coming years, as agreements with Morocco, Bahrain, Oman, CAFTA (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua) are currently awaiting implementation. Most experts expect these to go into effect within the next year.

However, there are also a number of free trade agreements currently under negotiation that will also impact local manufacturing. Currently, plans are underway to enact an Andean Free Trade agreement (Columbia, Ecuador and Peru), as well as agreements with the United Arab Emirates, Thailand, SACU (Botswana, Lesotho, Namibia, South Africa and Swaziland.) Clearly, manufacturers are going to need to get used to these agreements, and fast. Rather than dread the new agreements, many manufacturers and experts believe that they could be a boon for the industry.

"I think in many ways it will be a very positive thing for American manufacturing. It will make American products less expensive in the areas in which we're entering free trade agreements," Katherine Whitman, an international business consultant for Toluca Lake-based Pomegranate International, said. "It will open up great markets for American goods. Most manufacturers have already moved to lower cost countries like China, and frankly, I'd suspect that these trade agreements won't cause any more shifting."

According to Whitman, high-end manufacturers will likely reap the greatest dividends from these new agreements.

"Anyone who makes medical devices or more up-market electronic components, or anyone who makes any kind of consumer products that are tech savvy is going to be enabled to get their products into foreign markets," Whitman said. "Anybody who produces at the lower end will get hurt, whether it's inexpensive household products, or towels and sheets. Things that don't take much labor or skill would be adversely affected."

Perhaps the perfect beneficiary of these new agreements would be San Fernando-based electronic identification device manufacturer Precision Dynamics Corp. Walter Mosher, the company's chief technology officer and co-founder, has come out in favor of the new agreements.

"Undoubtedly, the agreements will be positive for the company. I'm very much in favor of free trade and I was very much involved in NAFTA getting passed," Mosher said. "The only way we can survive is with free trade. We need to get our cost structures in line and our cost of manufacturing in line, otherwise we will not be in the world markets. If we put up road blocks, they'll be up road blocks and no one will sell anything."

Mosher also agreed that the high tech nature of his firm's products will likely allow them to receive greater rewards than a less cutting edge company.

"We don't sell commodities. We have specialty products and free trade agreements help us by eliminating tariffs," Mosher said. "We've had problems with that before. Without free trade, it's hard to market your products worldwide. And we're a global business, so we definitely have an interest in their passage."

While free trade potentially carries many benefits to companies with global aspirations, there are pitfalls that they need to watch out for. S. Anthony Grasso, a senior international trade specialist at the Trade Information Center for the United States Commercial Service, urges companies to do their homework before jumping into untested waters.

"Companies need to understand the free trade rules of origin and how they meet those rules and where they source their products from. They are going to want to source their products from within the North America region so they can qualify," Grasso said. "They have to familiarize themselves with the NAFTA agreement, as well as the new ones that are on the way. They can go to the government's Export.gov website, talk with a local United States Dept of Commerce official, or hire a consultant."

Regardless, the prospect of these untapped markets continues to leave some Valley manufacturers intrigued by the possibilities. Kenneth G. Davis, the chair of the San Fernando Valley Chapter of the Society of Manufacturing Engineers, as well as the manager of new business development for Van Nuys-based confetti manufacturer Artistry in Motion Inc., also believes that CAFTA et. al, could have a salubrious effect on business.

"I'm waiting to see how CAFTA is going to play out. Those are some significant markets for our company and it is likely to provide a benefit," Davis said. "Certainly any of those treaties would help to open up the global market for us, in terms of putting our items in place for export. Currently, exporting with some of these countries is difficult to say the least. A treaty would certainly help."