Founder and director of Nepanoawhich guides multinational companies in expansion and transformation efforts.
getty
In recent decades, globalization has established itself as the modus operandi for international affairs. It is based on the idea of a world without borders and promotes greater economic integration and cooperation between countries, regardless of geographical boundaries. Promoting such interdependence has proved essential for unprecedented economic growth and development around the world.
This “world without borders” is demonstrated by the three countries in North America, which have one of the most profound commercial relationships for world trade and an incomparable trade agreement: USMCA, which to replace NAFTA in 2020. This regional bloc goes beyond simple diplomacy and brings trilateral commercial reciprocity, significant geographic advantages, and cultural and economic commonalities, consolidating into an innovative and collaborative vision.
Contents
What makes us strong?
Such an integrated view reinforces robust regional commercial dynamics and capitalizes on existing geographic features where current cross-border trade flows cross the U.S.-Mexico border to the busiest land crossing and the US-Canada border longest shared border in the world.
The region is enhanced by its abundant array of natural resources and its dual exposure to the Pacific and Atlantic Oceans, facilitating trade with other continents. Trade is then supported by the vast logistical infrastructures that move goods easily across their borders. This geographical proximity is enhanced by the fact that all three countries operate in similar time zones, making cross-border transactions easier to access and manage.
North America also has significant demographic advantages. Mexico has a huge supply of young highly skilled workers, while the US and Canada have significant high-wage jobs in developed industries. This is how the talent and expertise of its workforce comes into play when adding up multiple data sources Mexico, Canada and the UStotaling about 207 million working people and comprising about a quarter of the GDP of the world (about $26.3 billion). This helps position the region as one of the most competitive, innovative and productive in the world. The three countries are also each other’s largest trade and foreign investment partners, resulting in a generative integrated production platform.
The regional economic powerhouse we see today is rooted in the North American Free Trade Agreement (NAFTA) that came into effect in the early 1990s. NAFTA, a historic trilateral agreement, was responsible for overhauling trade relations and deepening economic integration by removing most tariffs and liberalizing trade. Under the renegotiated USMCA, trade flows in goods and services have changed continued to rise. This decades-long shared history forms the backbone of North American collaboration and is equipped to drive larger and more ambitious initiatives forward.
Reaping the rewards: businesses and regional economic integration
Within the current global geopolitical landscape, trade relations actually reflect a shift towards more regional and local operations. Nearshoring trends reflect this. specifically, Reuters reports that 45% of business leaders (download required) consider moving their production sites a high priority.
While on the face of it this goes against the premise of a borderless and globalized world, trilateral agreements such as the USMCA prove otherwise and show how cooperation and commercial relations between nations continue to form the backbone of world trade. Globalization has not disappeared; it has just started to change its geographic context.
To successfully reap such benefits, your company must prepare for greater integration through a three-pronged approach that focuses on business practices, people, and to a lesser extent, government. First, you must leverage the USMCA’s existing pro-business framework and tariff-free trade to facilitate reshoring efforts, procurement diversification, and investment in transcontinental infrastructure and innovation projects. I believe companies also need to start creating and promoting stories internally that effectively tie their successes to tangible people-centered outcomes to humanize how employees are already benefiting from integration efforts. This can help create more support at all levels of a company and put regional cooperation in a more positive light.
Second, you should take advantage of regional demographic advantages and consider increased visa sponsorships, such as the TN-NAFTA Professionals Visa, H1B or L visa, to increase access to skilled candidates with specialized technical knowledge. This promotes greater staff mobility, training and professional development, and helps promote the accreditation of professional and academic degrees earned in any of the three countries.
Third, your company must leverage its influence at all levels and engage with government representatives to strive for a trade-friendly legal and political environment in which such relationships can thrive. This includes modernizing border infrastructure through greater digitization and more streamlined cross-border processes that speed up the flow of goods, services and people without compromising on security. Lobbying can be a useful strategy, but it is not synonymous with relying on government to make changes. In the absence of political action, it is important that companies work proactively on this shared vision through their own business operations.
A collective North America
A collective North America does not seek political or geographic integration, but instead strives to align and internalize shared principles and values to propel the region toward more synergistic and collaborative exchanges. It is one of deeper economic integration and the adoption of policies that reduce economic friction, boost trade and investment, and recognize the North American workforce as the building block of consolidation efforts.
Companies that can successfully leverage North American commonalities while strategically reducing disparities will reap myriad benefits in helping to position themselves as the driving architects responsible for shaping a collective North American future.
businesskinda.com Business Council is the leading growth and networking organization for entrepreneurs and leaders. Am I eligible?
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.