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Summary: Mexico and the United States - Strengthening North American Supply Chains

Supply chains panel

From L to r: Eric Farnsworth, Maria Contreras-Sweet, Eduardo Medina Mora. (Image: Jorge Merino)

October 01, 2014

Speakers:

  • Maria Contreras-Sweet, Administrator, U.S. Small Business Administration (SBA)
  • Eduardo Medina Mora, Ambassador of Mexico to the United States
  • Eric Farnsworth, Vice President of Council of the Americas (moderator)

Summary

Small- and medium-sized enterprises (SMEs) are the backbone of not only the U.S. economy, but also of the broader North American free-trade area. Canada and Mexico are the top two destinations for U.S. exports from SMEs, and small-business suppliers also feed inputs into larger companies and benefit from the expanded exports of the final products. In the run-up to the next round of the U.S.-Mexico High-Level Economic Dialogue and the North American Leaders Summit, this event explored the importance of interlocking supply chains to the broader goal of North American competitiveness.

The New Norm: “Made in North America”

Since the North American Free Trade Agreement went into force two decades ago, the regional economic model has radically changed. As COA’s Eric Farnsworth noted, no longer do Canada, Mexico, and the United States trade together, but rather the three countries design and make products together so that “made in North America” is now the norm.

According to the U.S. Small Business Administration’s Maria Contreras-Sweet, Mexico is currently the United States’ second-largest trading partner. U.S. exports to Mexico are greater than those to the BRICs (Brazil, Russia, India, and China). She also noted that 6 million U.S. jobs rely on U.S.-Mexico trade.

While many believe the international trade agenda is strictly for big businesses, Contreras-Sweet explained that technology lowered the threshold for exporting, and as a result, millions of new small businesses have joined international commerce. Although only 5 percent of small U.S. businesses engage in international trade, those businesses typically grow by 40 percent after joining transnational commerce.

U.S. Small Businesses on the Global Stage

Contreras-Sweet discussed several tactics to promote innovation and international participation of U.S. small businesses. The Small Business Network of the Americas (SBNA) helps small businesses participate in global trade by linking national networks of small business support centers. The Small Business Innovation Research and the Small Business Technology Transfer (SBIR/STTR) provide non-dilutive funds for early-stage research and development at small businesses. In addition, a national network of Small Business Development Centers (SBDC) offers free advice to these enterprises.

Contreras-Sweet also spoke about the QuickPay Initiative, which requires federal agencies to speed up payments to small business contractors with the goal of paying within fifteen days. Meanwhile, SupplierPay is modeled after the QuickPay Initiative, and further enables small businesses to get paid faster, advance their development, and enhance global engagement.

Despite the success of these initiatives, there are still hurdles, particularly in modernizing outdated models. For example, Mexico’s Ambassador to the U.S. Eduardo Medina Mora said: “We have twenty-first century trade on top of twentieth-century framework on top of nineteenth-century infrastructure.”

Small Business Administration, Redefined

Contreras-Sweet gave the Small Business Administration’s acronym, SBA, a more fitting title: Smart, Bold, and Accessible. Small enterprises must respond to technological advancements; they must be bold in the strategic way they choose to explore new markets; and they must be accessible to all individuals, “from the vets coming home to the seniors who are entrepreneurs,” said Contreras-Sweet. Medina Mora added that innovation will also be critical to advance the global impact and development of small businesses.