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Commerce Department is trade resource for cities.

The U.S. Department of Commerce has established a new "one-stop" source for information on the vast array of Federal export programs: the Trade Information Center which opened on May 24, 1991. The Center's staff guides exporters to programs available from 18 federal agencies, and can be reached at its toll-free number, 1-800-USA-TRADE.

Since it opened, the Center has counseled more than 22,000 businesses from across the country that are beginning or expanding their export activities. Thirty-two percent of callers are new to exporting, 17 percent are new to a particular foreign market and 15 percent are experienced exporters to many markets. Other callers include representatives from consulting firms, banks, trade associations, municipal government officials and local economic development agencies.

International trade specialists are ready to advise businesses on how to tap into appropriate government programs and answer a variety of questions on the export process. Information is available on a number of topics including how to begin exporting, foreign market research, export financing, documentation and overseas trade events.

The Trade Information Center also maintains state-by-state files which include information on export assistance offered by local economic development agencies, world trade centers, chambers of commerce, small business development agencies and district export councils. These organizations also use the Center as a contact point for information on Federal export programs.

Q. How can the Trade Information Center be helpful to local governments?

A. The Trade Information Center regularly works with local government offices, helping them answer constituent questions related to international trade and Federal export resources. In addition, through its databases, the Center collects information on export-related events taking place across the United States. If a city is organizing an export-related event, the Trade Information Center can publicize the event to callers from that metropolitan area. Trade specialists can also directly answer questions that city economic development officials have related to Federal export assistance programs.

International trade specialists staffing the Center continually work on outreach with state and local economic development organizations to improve communication for the benefit of U.S. firms. Trade specialists cover outreach to specific regions of the United States. City officials involved in export promotion are encouraged to call the Center and introduce themselves to the trade specialist covering their section of the country.

In preparing this special report on trade with Canada and Mexico, the Trade and Information Center of the U.S. Department of Commerce was asked to identify the most frequently asked questions relative to the proposed North American Free Trade Agreement (NAFTA) and trade with Canada and Mexico in general, and to summarize their responses. The answers reflect the view of the U.S. Department of Commerce and are intended to serve as a baseline of information on free trade with Canada and Mexico.

Q. What is what is the North American Free Trade Agreement?

A. On February 5, 1991, the Presidents of the United States, Mexico and the Prime Minister of Canada announced their intention to begin negotiations on a North American Free Trade Agreement. This agreement would create the world's largest free trade area, comprising 360 million people with a combined annual output of $6 trillion, 20 percent larger than the European Community.

After months of intensive study, all three governments concluded that a NAFTA would promote economic growth through expanded trade and investment. The staged elimination of barriers to the flow of goods, services and investment coupled with strong intellectual property rights protection (patents, trademarks, and copyrights) will benefit businesses, workers and consumers.

Q. How would a North American Free Trade Agreement (NAFTA) benefit the United States?

A. Benefits of the U.S.-Canada Free Trade Agreement are already being seen. These include increased U.S. exports, expanded investment opportunities, more Canadian Government procurement contracts going to U.S. firms, accelerated tariff reductions, and progress on border crossing procedures and standards harmonization.

Under the two-year old U.S.-Canada Free Trade Agreement, business opportunities are increasing for U.S. firms. Lower tariffs under the agreement and the strong Canadian dollar have created an attractive environment for increased U.S. exports.

A NAFTA will help stimulate faster economic growth in Mexico. This will increase the Mexican demand for U.S. products. Expanding U.S. exports translates into increased jobs in the United States. It is estimated that each $1 billion in U.S. exports creates over 22,000 U.S. jobs. U.S. consumers also will benefit from access to a wider variety of products and services at lower prices.

Canada and Mexico have always been important destinations for U.S. foreign direct investment. U.S. investment in Canada stood at $63 billion in 1990, nearly 20 percent of all U.S. foreign direct investment, and at $7.1 billion in Mexico in 1989. Investment flows are expected to increase under a free trade agreement that includes all three countries. While many U.S. companies sell directly to Canada and Mexico, both countries increasingly are important markets for joint ventures, licensing, and affiliate sales as well.

A larger, more dynamic North American market will be a more attractive place to invest, further strengthening the nation's production capacity and adding to the number of U.S. jobs.

Q. Is there opportunity for small and minority owned businesses in a North American Free Trade Area?

A. Many small U.S. businesses have found profits and growth through exports to Mexico and Canada. The U.S. Department of Commerce has helped hundreds of small and medium U.S. companies find agents and distributors for their products in Mexico and Canada over the last few years. Many other smaller U.S. firms have increased profits through sales of components and supplies to larger U.S. firms made more competitive by their Mexican operations.

There are many small businesses in Mexico and Canada who are looking for U.S. partners to strengthen their competitive position at home and in the North American marketplace. Small and minority businesses in the United States can benefit from such partnerships. A free trade agreement strengthens the rules of the game for contracts and joint ventures.

Q. What are the barriers to trade that a NAFTA might address?

A. Tariffs, import licensing requirements, import quotas, restrictions on foreign investment, and certain technical regulations and standards can be trade barriers. Their effect can be to raise the price of a product or service for consumers.

Tariffs are taxes placed on imported products to reduce import competition. Different licensing and standards requirements between countries make it difficult for exporters to comply.

Import quotas place caps on the quantities of imports permitted. Restrictions on foreign direct investment can distort both trade and investment patterns and provide unfair advantages and protection to domestic investment.

Negotiation of a North American Free Trade Agreement will include consideration of all these issues.

Q. Will free trade with Mexico and Canada mean the United States will lose jobs?

A. Free trade is not a zero sum game. It has a positive impact on the American economy and jobs. Trade agreements reduce barriers to commerce and open markets.

The U.S. Department of Commerce estimates that every $1 billion in exports generates 22,000 jobs in the United States. By that yardstick, U.S. exports to Canada already account for 1.9 million U.S. jobs. Moreover, since the CFTA was implemented, 264,000 jobs have been created in the United States as a result of increased exports to Canada.

Trade between the United States and Mexico has increased jobs in both countries. Mexico made the commitment to free trade and joined the General Agreement on Tariffs and Trade in 1986. The U.S and Mexico embarked on framework trade agreements to open their markets in 1987. Since then, U.S. exports to Mexico have doubled. And Mexican exports to the United States have also grown. This means jobs are being supported and created in both countries.

A February 1991 report by the International Trade Commission, a 1990 study commissioned by the Department of Labor, and recent studies commissioned by business associations all indicate that freer North American trade will result in a net increase of jobs in each country.

Q. Won't a NAFTA mean that imports from Mexico will put U.S. companies out of business?

A. The experiences of two years of phasing-in the U.S.-Canada Free Trade Agreement demonstrate that no dramatic changes in trade, investment or employment have occurred, nor were they expected.

Tariff and nontariff barriers are being eliminated gradually, just as they will be with Mexico. New market openings that result from an agreement can be phased in with adequate transition periods. Safeguard mechanisms can be put in place to ensure businesses and workers have time to adjust to free trade and to avoid unanticipated surges affecting an industry's smooth transition to the new environment.

Laws that protect U.S companies against unfair competition from subsidized or dumped goods will continue to be enforced under a free trade agreement.

Q. What can the department of commerces to to help local firms?

A. The Department of Commerce offers many services and publications to help companies consider trade with Canada and Mexico. Each year the Department sponsors many trade missions and shows, business seminars, and matchmaker events. Through its 68 district and branch offices located across the United States, the Department of Commerce provides:

[subsection] sector and subsector market research reports and trade statistics on Mexico and Canada

[subsection] background reports on individual foreign firms on beheld of U.S. companies considering business dealings

[subsection] market research tailored to a potential U.S. exporter's particular product

[subsection] business counseling for companies seeking to explore opportunities in the Mexican and Canadian markets

[subsection] trade leads received by the U.S. Embassies in Mexico and Canada for particular U.S. products or services

[subsection] information on Mexican or Canadian sales agents or distributors.

The Department's U.S. and Foreign Commercial Service (US&FCS) posts in Mexico and Canada sponsor a variety of trade events which introduce U.S. firms to those markets. They can arrange meetings between U.S. company representatives and potential Mexican and Canadian business partners. In Mexico, the Department maintains commercial offices in Mexico City, Guadalajara, and Monterrey. Offices in Canada are located in Ottawa, Toronto, Montreal, Vancouver, Calgary, and Halifax.

The Department's Office of Mexico and its Office of Canada located in Washington, D.C., also are important sources of information and assistance for companies seeking to investigate Mexican or Canadian trade and investment opportunities.

Q. What other resources exist?

A. State economic development and trade promotion offices offer a wide variety of services to facilitate international commercial activity. Several states have opened business offices in Mexico and in Canada. State and local chambers of commerce and other business development organizations also are active in the international trade and investment arena.

The country desk officers are a key source for information on trade potential for U.S. products in specific countries. These offices highlight new opportunities for trade and investment and can look at the needs of an individual firm wishing to sell in Canada or Mexico. Desk officers collect information on regulations, tariffs, business practices, economic and political developments, and market size and growth. They also provide information on upcoming trade events and the services of the U.S. commercial offices in Canada and Mexico.

Mexico Desk, International Trade Administration (202) 377-4644

Canada Desk, International Trade Administration (202) 377-3101

Tom Cox is director of the Trade Information Center and Laura Buss is a trade specialist for the Center.
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Title Annotation:Special Report: Bringing Dollars Home by Trading Overseas
Author:Cox, Tom; Buss, Laura
Publication:Nation's Cities Weekly
Date:Feb 17, 1992
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