A room full of business owners and managers ranging from family-owned ventures like Clinger Holsters of Van Buren to Bio-Tech Pharmacal of Fayetteville to J.B. Hunt Transportation spent the afternoon hearing from two Canadian trade officials Wednesday at the Arkansas World Trade Center in Rogers.
The central message of more than two hours of talks between Canadian foreign policy consul Vasken Khabayan, trade commission consul Delon Chan, and the local businesses centered around the benefits and opportunities of doing business with Canada. The two Canadian trade officials are based in Dallas and said also held other meetings during their Arkansas visit, with one of those was with Wal-Mart.
Last year total goods and services traded between the U.S. and Canada totaled nearly $635.1 billion. On average, Canada and the U.S. trade an average of $1.2 million every minute per day in bilateral goods and services, said Khabayan. He said 70% of Canadian imports come from the U.S.
For Arkansas, Canada represents $1.2 billion annually in exported goods and another $179 million in services exported there. Following are the top exports.
• Plastics ($101 million)
• Iron & steel ($82 million)
• Grains ($62 million)
• Paper & cardboard ($47 million)
• Motor vehicle parts ($34 million).
The top services exported are professional business & technology ($33 million) and telecommunications ($14 million).
Khabayan said there is also strong cross-border supply chain between the U.S. and Canada.
“We don’t just sell to each, but we make things together,” he said
The automotive sector represents nearly $110 billion in cross-border trade annually. He said the Jeep Wrangler that rolls off the line in Toledo, Ohio, contains a metal crossmember bar made in Strathroy, Ontario, which is shipped to Belleville, Mich., then made in a carrier and sent to Toledo where it’s assembled into a front-end module at Magna T.E.A.M. before it’s mounted in the Jeep at the Chrysler plant also in Toledo. The wheels on the Jeep could be made at Superior Industries in Fayetteville, Ark., or perhaps Mexico where Superior relocated the majority of its production several years ago.
POTENTIAL NAFTA CHANGES
Khabayan said the U.S. auto industry has taken full advantage of NAFTA rules and was one of the first industries to do so. He said the auto supply chain followed. Under a recent NAFTA renegotiation proposal submitted by the U.S., 50% of the an automobile’s sum parts must originate from the U.S. to be exempt from taxation. As the agreement now reads 65% of the automobile’s sum parts must originate from North America. He said so much of the supply chain with U.S. companies has moved out of the U.S. that he believes the 50% rule isn’t fair.
“It’s important that we turn out the best products we can because we are competing with the entire globe today. The auto industry is already doing that with the rules we have today,” he said.
Talk Business & Politics asked the trade officials about other sticking points they had with recent U.S. NAFTA proposals. Khabayan said Canada doesn’t want the 5-year automatic termination of the agreement. He said there should be annual reviews but to abruptly end the contract doesn’t make sense.
“If marriages did this, there would probably be a lot more divorce,” he said. “We don’t see the need for the hard stop.”
The Trump administration forced renegotiation for the trade agreement put in place during the President Bill Clinton administration.
Also, he said the U.S. proposal suggests eliminating the dispute settlement arbitration which is typically part of every trade deal. He said Canada doesn’t want this changed. When asked what changes Canada is bringing to the negotiation table, he said several of the changes came about from the recent trade agreement the country made with the European Union. He said a more progressive view was a new model for Canada going forward and they hope to get the NAFTA partners on board with at least some of their ideas.
He said they changed the rules on government procurement to include not only national and provincial but also municipal because that provides more access to each country’s businesses. He also said there is an entire chapter on empowering women in trade as well as the indigenous populations which are often not considered in each of the three NAFTA countries. He said moving toward a more renewal clean energy model should also be part of the discussion.
Chan and Khabayan each said they don’t see a drop in attitudes about the U.S. because of the NAFTA negotiation which is to continue into the spring. When asked if Canada was meeting separately with Mexico outside of NAFTA renegotiation, Khabayan said virtually the entire Canadian trade team is focused on NAFTA right now.
“It doesn’t make sense for us not to give our largest trading partner our full attention while NAFTA renegotiation is underway,” he added.
EXPORT TRAINING FOR SMALL BUSINESSES
Several of the small business owners attending Wednesday’s session also received certificates for completing the Export Tech training done by the Arkansas Economic Development Commission. Rudy Ortiz, manager of client services at AEDC, said the three couples and their family businesses had completed the basic course for how to export products.
“This is like your basic degree and now the real work begins as you dig into and explore those markets that hold the best opportunity for you,” Ortiz told the business owners. “The resources here at the World Trade Center are full of years of knowledge, make sure you reach out to them.”
Rebekah Bennett and Valeriya Zayets of Fayetteville-based Bio-Tech Pharmacal make dietary supplements and were two of those to get certificates.
“We are selling through wholesalers and via e-commerce and Walmart.com. We see Canada as an opportunity for our business because the consumer market is similar to that in the U.S. Things that are trending here are likely trending there. The single-payer healthcare system in Canada that doesn’t cover prescription drugs is also a plus for us as consumers are more apt to go into stores and buy vitamins and supplements out of pocket,” she said.
Mary and Chris Tedder of Van Buren, owners of Clinger Holsters, also finished the Export Tech class. The couple said they are mostly selling direct to consumer and they also sell on Walmart.com and eBay, all domestic at this time.
“We are working on a duty holster that could be sold to entire police forces. Right now it’s more like 10 or 20 units sold at a time. The product is made in Van Buren and we hope to grow this business in Mexico, Puerto Rico and Canada, primarily NAFTA countries,” Chris Tedder said.
Tedder doesn’t think NAFTA will totally unravel.
“There may be a few concessions here and there but the agreement is important to the U.S.” he said.
Brother and sister team Woody and Helen Shire of Springdale also completed the export training. They have been selling their collectable coins when they got an order from overseas. The family business makes coins embossed and engraved with Game of Thrones scenes. The coins are made in Springdale. Helen Shire said they want to more strategically market their coins abroad to distributors instead of reactively filling orders that find their way to the company website.
“Game of Thrones is a popular around the world and we want to take advantage,” she said.