For the first time in a U.S. trade agreement, the Treaty between Mexico, the United States and Canada (USMCA) includes a chapter dedicated to small and medium-sized enterprises (SMEs), recognizing their role in each signatory economy.
Why is this relevant? Because U.S. companies with fewer than 500 employees account for two-thirds of the companies that trade goods with Canada and Mexico.
Among other measures, the USMCA promotes cooperation and information sharing to increase trade and investment opportunities for SMEs in the region, reduces red tape for shipments valued at less than $2,500, increases de minimis levels, eliminates the local presence requirement for cross-border service providers, and facilitates the exchange of information and best practices for SME participation in covered government procurement.
The U.S. Small Business Administration (SBA) tracks savings associated with reducing the regulatory burden affecting small businesses in an annual report.
Improving the ability of small businesses to participate in the global marketplace is a key goal for U.S. policymakers.
USMCA
Recommendations resulting from the review of Executive Order 14017 call for: investing in small, medium, and disadvantaged firms in critical supply chains; developing an ecosystem that includes the growth of innovative small, medium, and disadvantaged firms; and examining the U.S. Export-Import Bank’s ability to use existing authorities to support U.S. manufacturing.
Other policies, such as preferences in government procurement, promote economic opportunities for small businesses, including those in the manufacturing sector.
The United States is party to 14 free trade agreements (FTAs) covering trade with 20 countries. The major development during the review period was the conclusion and implementation of the revised agreement with Canada and Mexico, the USMCA, which entered into force in July 2020.
The USMCA maintains the zero tariffs between the three countries that were in place under NAFTA.
The United States implemented the USMCA through the enactment of the United States-Mexico-Canada Agreement Implementation Act (P.L. 116-113), and certain subsequent amendments or technical corrections through the Consolidated Appropriations Act, 2021 (P.L. 116-260).
