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Blog Posts

President Trump, NAFTA and the North American auto industry

The automotive industry in North America is one of the success stories of the North American Free Trade Agreement (NAFTA). The elimination of duties and easing of cross-border trade that NAFTA wrought has increased efficiencies in the automotive sector, leading to lower costs and ease of commerce across a well-integrated, North America-wide supply chain.

What could change?

The change in administration at the White House, however, is very likely to lead to changes in trade relations among the three NAFTA countries. President Trump has made clear his intention to keep jobs in America and source American products as much as possible.

Trump has targeted the reduction of the U.S.’s trade deficit with Mexico as one of his prime objectives: the value of which was $55.6 billion in 2016 – due in large part to the U.S.’s trade deficit in autos and auto parts.

Changes to NAFTA affecting the auto industry will have far-reaching impacts to importers, exporters, carriers and brokers across North America.

Trump NAFTA auto industryWhat would it mean?

If Trump seeks a deal that guarantees a certain percentage of production for the U.S., this could disrupt a complex supply chain that sees parts crisscrossing NAFTA borders and has made North American car production competitive with Asia and Europe.

There’s also a risk that changes could make North American producers less competitive, or even motivate them – as well as overseas suppliers – to choose to pay a tariff rather than follow the complicated new rules – meaning higher costs that would ultimately cost consumers.

What should we do?

For now, we can only take a wait and see approach with the ongoing NAFTA talks. Suppliers may want to consider expanding sourcing options if rules of origin for autos and parts become stricter. And anyone can keep informed by checking our “What’s happening with NAFTA” blog to keep up on the latest news.

This email address is being protected from spambots. You need JavaScript enabled to view it. our consulting department to understand the latest NAFTA talks and to get information on how a rejigged NAFTA could affect you.

Information provided by: NAFTA & Free Trade Dept. - Cole International

How do you export?

As an exporter, you may find government compliance requirements confusing, feel uncertain about who is responsible for costs and risks during transit and wonder whether you’ve adequately packed and insured your goods.

If so, check out our latest video blog where we offer our tips for taking the headache out of exporting. These include:How do you export

  • First, accept that you can’t know everything about every international market since regulations are constantly changing.

  • Team up with a professional, competent freight forwarder to help you understand your export compliance responsibilities and any associated costs.

  • Ask your freight forwarder for suggestions or requirements regarding export packaging.

  • Discuss shipping terms of sale with your foreign customers to ensure the appropriate terms are selected.

  • Carefully review all buyer and seller purchase orders and purchase order acknowledgments to ensure they make sense and don’t contain any conflicting or contradictory language.

  • Speak with your company’s insurance agent to understand any existing coverage you have, and identify areas where additional coverage may be required.

Following these tips will help you understand your responsibilities and have confidence in the process, leading to the following benefits to your company:

  • Fewer misunderstandings, disagreements and a lower chance of costly litigation between your company, vendors and customers.

  • A more stable business operation with longer lasting vendor/customer relationships.

  • The ability to identify opportunities to reduce costs and improve service, thereby improving your overall customer service levels.

Here at Cole, we have extensive experience with exporting goods from Canada and the U.S. to international markets around the world. We always consider cost-effective delivery solutions to suit your company’s needs and we offer extensive international service options through a network of professional worldwide agents...Watch Video

Cargo Insurance – Are you covered?

All kinds of little things can go wrong to delay or damage your goods while in transit. And since a lot of those things are outside of your control – doesn’t it make sense to insure your goods, just in case?

Cargo insurance coveredThe cost to businesses of natural disasters, manmade errors, mechanical problems, or unintentional mistakes can be devastating.

So, even though no one can guarantee problems won’t happen, you can take steps to protect yourself from a substantial financial loss due to mishaps along the supply chain. One important precaution you can take to mitigate against a damaging financial hit is to insure your shipment with a solid cargo insurance policy.

Cargo insurance provides compensation should cargo fail to arrive safely at its destination. Policies vary in cost and coverage, depending on your needs. Insurance can be applied to land, marine, or air shipments – or a combination of these – and can cover international or domestic shipping.

Regardless of the type of shipment or mode of transport, shippers should review their cargo coverage needs with their insurance provider.

Consult a provider with an extensive background and a good reputation who can help you understand the variables at play and choose the right policy. Make sure the insurance policy can protect your cargo over its entire journey, and covers all modes of transportation you’ll use.

For detailed information, contact your Logistics Coordinator. For more general information, contact us today to discuss the best way to ensure the safe shipment of your goods.

Information provided by: Freight Dept. - Cole International

NAFTA – Who’s won? Who’s lost?

NAFTA – the North American Free Trade Agreement – came into effect on January 1, 1994, building upon the Canada-U.S. free-trade deal of 1988 and creating the largest free-trade area in the world.

It promised unprecedented market access North America-wide and free and open trade between Canada, the United States and Mexico.

Now, 23 years on, the Trump Administration is clear in its desire to renegotiate NAFTA… The three parties are now in talks for this purpose.

What’s been the general effect of NAFTA?

Early on, it was hoped that the agreement would lead to thousands of new jobs, easing of trade, a narrowing of the income gap and greater prosperity (particularly for Mexico). At the same time, opponents worried the agreement would cause huge job losses for the two richer countries as companies sought make use of lower costs and wages in Mexico.

In reality, NAFTA caused neither the huge job losses feared by the critics nor the large economic gains predicted by supporters.

But the impacts of NAFTA are difficult to isolate and measure since trends in trade and investment are influenced by variables outside the scope of the agreement – factors such as global economic trends, inflation and currency fluctuations.

A clear benefit for the North American economy – and businesses – has been the creation of a seamless supply chain for many goods. The components and labour input for many goods – the automotive industry being a prime example – cross multiple borders in both directions en route to market, allowing industries to increase efficiencies and keep costs down.

Are there winners and losers in this deal?NAFTA won lost

Let’s take a look at how each of the NAFTA countries have fared since the agreement came into effect.

MEXICO

The good:

  • Overall employment has increased

  • Mexico’s share of the US market has more than doubled – from 5% in 1988 to 13% last year

  • Large Mexican farms that rely on exports have profited

  • Many cities in central Mexico have seen an emerging, prosperous middle class thanks to the growth in manufacturing jobs

The less good:

  • The small-scale agricultural sector has declined substantially

  • Prices of some staples – such as corn – have increased substantially

  • Many of the new jobs are low-wage factory jobs in industries dominated by large U.S. corporations – and with little job security or opportunity for advancement

  • The lowest end of the income scale hasn’t seen much improvement: the Mexican poor remain poor

What they’re after: If NAFTA is reopened, Mexico will likely seek changes in the areas of security, counter-narcotics, and transmigration. Mexico has indicated it may withdraw from the agreement altogether if the new terms are not deemed favourable.

U.S.

The good:

  • The overall effect of NAFTA on the U.S. economy has been modestly positive: trade with Mexico and Canada combined now accounts for about five per cent of U.S. economic activity

  • U.S. produce prices remain low, largely thanks to Mexican immigrant labour (legal and otherwise)

  • The increase in Mexican imports to the U.S. has lowered the price of some consumer goods

The less good:

  • The U.S. has lost manufacturing jobs to lower-cost markets (yes, Mexico, but also China and others)… however, this trend was already under way before NAFTA, and is mostly attributed to advances in technology and automation rather than the agreement itself

  • Americans aren’t crazy for it: According to a recent Globe and Mail poll, only about half of Americans believe NAFTA has been good for their country

Canada

Overall, NAFTA was neither devastating nor transformational for Canada's economy. There have been benefits; however, greater U.S. border security since 9/11 and the emergence of new trade rivals have since watered down some of the initially-positive effects of NAFTA.

The good:

  • Canadians like it: According to a Globe and Mail poll, 74% of Canadians believe NAFTA has been good for the country

  • The share of Canadian goods exported to the U.S. has increased from roughly 70% in 1988 to a high of nearly 90% in the early 2000s (and it has since come down to about 75% due to market diversification)

  • Labour productivity has increased, particularly in manufacturing and other older industries

  • Canada's sales of oil to the U.S. grew 527% from 1993 to 2015; we became, and have remained, the largest supplier of oil to the U.S. since 2006

The less good:

  • Canada’s share of the U.S. market has shrunk from about 19% in 1988 to 13% last year. Canada is now in number two in supplying imports to the U.S.

  • Canada has been on the losing end of most NAFTA-related investment disputes with the U.S.

  • Large swaths of Canada’s economy remain essentially outside of NAFTA’s influence – most notably agriculture and lumber

  • Canada has been frustrated by the issue of lumber, where the U.S. alleges the provinces unfairly subsidize producers

  • Most of Canada’s vehicle production has been relocated to the southern U.S. and Mexico.

The future…

No one knows for sure what the future holds. Certainly, all three signatories have their wishes and priorities but how it all plays out in the renegotiation is anyone’s guess.

Keep an eye on our “What’s happening with NAFTA” blog to keep on top of this evolving story. And, as always, feel free to This email address is being protected from spambots. You need JavaScript enabled to view it. our Free Trade specialists to discuss the latest developments and to make sure you are prepared to make the most of a revamped NAFTA.

Information provided by: NAFTA & Free Trade Dept. - Cole International

If Customs comes to visit, will you be prepared?

Will you be confident or concerned if you’re selected for a customs verification?

If your company ships items across the Canada-U.S. border, there’s a good chance that one day you’ll be audited by the Canada Border Services Agency (CBSA).

A CBSA audit, also known as a verification, can impact every department within your organization, so a thorough corporate understanding of customs requirements and responsibilities is a must.

Here are some tips to help your company stay compliant and be prepared for a customs visit or verification:

  1. Maintain all records relating to your imports and exports for a period of seven years. This includes: purchasing records, invoices, contracts, payment records, and inventory, receiving and transportation records. Being Screen Shot 2017 09 20 at 11.12.05 AMable to locate and quickly retrieve all the documentation to support customs requirements will start you on the road to a successful verification.

  1. Establish a process for identifying what you ordered, what you paid for and what you received, and compare that information with the declaration presented to customs by your broker.

  • If you find any errors, notify your customs broker immediately and have them submit corrections to CBSA on your behalf. You are required by law to voluntarily correct these errors within 90 days of finding them.

  1. Ensure you and your employees are familiar with the regulations, processes and requirements that impact your cross-border transactions.

  • Focus initially on learning more about tariff classification, valuation and free trade agreements. These three areas impact almost every importer or exporter in one way or another.

  1. Get help if you need it! Customs is a complex business. Ensure you have a strong professional support network that is focused on looking after your needs.

Knowing your responsibilities will allow your business to run smoother and minimize the impact and anxiety of a customs verification. How, you ask?

  • You will be better prepared. It is much easier to weather the verification when everything is properly documented and you are prepared to knowledgeably answer questions.

  • Fewer penalties. Don’t wait for customs to find the errors; conducting your own internal reviews and making corrections as errors are found will reduce penalties.

  • Voluntary compliance creates a positive profile of your business within the customs system. This results in faster clearance times, fewer customs exams and reduces customs’ overall interest in your ongoing business transactions.

Our experienced professionals can help ensure your compliance in advance of a customs audit, and guide you through the process when it happens – greatly increasing your chances of a positive outcome...Watch Video

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