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USMCA Paves Way for Small Business

Dedicated small business chapter is a first for U.S. trade agreement
Release Date: 
Friday, January 17, 2020

The United States-Mexico-Canada Agreement, which includes specific protections for small- and medium-sized businesses, was approved by the U.S. Congress Thursday. It heads to the White House for President Trump’s signature. The U.S. will be the second country to ratify the USMCA after Mexico. Canada needs to ratify the USMCA for it to take effect.  

“Passage of USMCA is a win for American small businesses and the nation’s economy,” U.S. Small Business Administration Administrator Jovita Carranza said. “USMCA includes the first-ever chapter dedicated to small business and will enforce new intellectual property provisions, bolster innovation, and support small businesses engaging in digital trade. Additionally, USMCA removes burdensome regulations, reduces duplicative red tape, and lowers costs that will help the 30 million U.S. small businesses that employ half the private-sector workforce and create two-thirds of all new jobs, to better compete globally. President Trump continues to follow through on his commitment to modernize and implement free and fair-trade agreements that greatly benefit our nation. This is another example of the President’s insight into our economy and his unwavering support of U.S. small businesses.”

The USMCA’s dedicated Small and Medium Enterprise chapter is a first for any U.S. trade agreement, which establishes a committee on SME issues with government officials from each country. Additional provisions simplify customs and trade rules and reduce barriers and small business costs. The USMCA specifically:

  • Cuts red tape at the border and encourages small business consideration when regulations are in development and implemented.
  • Supports the 21st century economy with strong digital trade detail supporting internet-enabled small businesses and e-commerce exports.
  • Promotes small business participation in government procurement, offering another way to grow their customer base and expand.
  • Protects innovators’ intellectual property.
  • Eliminates local presence requirements for cross-border service providers, benefitting small businesses by removing the burden of opening a foreign office to do business.

“The passage of USMCA represents another promise made and promise kept by this President. President Trump continues to deliver results for American workers and American small businesses. By reducing costs, red tape and regulations, it will create more opportunities for companies across New England and the U.S.  to tap into foreign markets and expand their global reach, “said Wendell G. Davis, SBA’s New England Regional Administrator.

Small businesses represent approximately 98% of all exporting firms nationally, with roughly 82,000 small businesses exporting to Canada and 53,000 exporting to Mexico.

According to the Office of the United States Trade Representative, Vermont exported $1.3 billion worth of goods and services to Canada and Mexico in 2018. Vermont’s top export during this time was computer and electronic products worth $819.6 million.

With two-thirds of the world’s purchasing power in foreign countries, expanding markets through trade is one strategy for small businesses to generate and sustain business and economic growth. In fiscal year 2019, the SBA supported more than $1 billion in export loans.