Officials from the U.S., Canada, and Mexico are in the midst of renegotiating the free trade agreement that regulates the largest economic region in the world. The outcome of these talks on the North American Free Trade Agreement (NAFTA) will have widespread effects on the global economy, but the largest impact may be felt right here in Michigan. 

The reliance of the state’s manufacturing and agricultural sectors on global trade and export markets make Michigan the number one state most-impacted by NAFTA. In fact, Michigan sells more goods to Canada than it does to its next nine largest foreign markets combined. West Michigan alone exports $5 billion under the agreement. 

For this reason, The Right Place recently hosted a luncheon where almost 200 local business and community leaders were able to hear an update on NAFTA from the Consul General of Canada in Detroit, Mr. Douglas George. Attendees also heard from a panel of several local business leaders affected by NAFTA, which was moderated by Grand Valley State University’s Van Andel Global Trade Center. 

NAFTA’S IMPACT ON MICHIGAN AND THE U.S. 

Mr. Douglas George, Consul General of Canada in Detroit

Mr. Douglas George’s keynote discussed the importance of NAFTA, which facilitates a trillion dollar trade and investment relationship between the U.S. and Canada. Nearly 9 million jobs in the U.S. depend on this trade and investment. 366,000 of those jobs are located in Michigan. These are quality jobs with higher wages, as export-related jobs are paid between 13 and 18 percent more than the national average. 

All of these jobs could potentially be at risk should the U.S. withdraw from NAFTA, which is why it is critical to come to a mutually beneficial partnership during these negotiations. According to data from the U.S. Bureau of Economic Analysis, the U.S. already possesses a trade surplus with Canada when it comes to service, manufacturing, and agricultural exports. 

While the U.S. does currently have a trade surplus with Canada, the trade balance between the two nations is only one part of the equation. Both economies have deeply connected supply chains and there are approximately $2 billion in goods and services crossing back and forth over the U.S.-Canada border on a daily basis. In fact, the busiest of these commercial land crossings is right here in Michigan. 

The need for increased efficiencies at this heavily-trafficked border have necessitated the development of the Gordie Howe International Bridge in Detroit. This six-lane bridge will connect 1-75 to Highway 401 in Canada, and support thousands of jobs across Michigan and the United States. The procurement process for the bridge has already begun, and construction is expected to begin in 2018 after a private sector partner is selected to build the crossing. 

HOW TO GET INVOLVED 

When NAFTA was enacted 24 years ago in 1994, the world economy looked very different than the digital economy we live in today. These changes necessitate a modernization of NAFTA to enhance the North American economy’s global competitiveness. However, given Michigan’s reliance on this agreement, any breakdown in negotiations could have widespread negative effects on the West Michigan economy. 

Working together, we must communicate the importance of a free and open cross-border trade policy. We have the opportunity to make a good agreement even better and align NAFTA to new economic realities. You can make your voice heard by contacting your respective industry associations and local chambers of commerce. 

For more information and a full version of the NAFTA update presentation by the Consul General of Canada in Detroit, please click here.