As the U.S.’ neighbors in North America, Canada and Mexico are the logical first stops for Wisconsin companies that are new to exporting. The countries share geographic proximity, cultural ties and a long history of doing business together. Customers in these markets have a high level of trust in U.S.-made products, and the high volume of trading among these countries means potential local partners in these markets are likely to be well versed in handling logistical and regulatory issues that may arise. The North American Free Trade Agreement (NAFTA) that went into force in 1994 eliminated most duties on Wisconsin’s exports into Canada and Mexico. On July 1, 2020, the U.S.-Mexico-Canada Trade Agreement (USMCA) took effect, with new rules affecting the trade of cars and auto parts, new policies on labor and environmental standards, intellectual property protections, digital trade provisions and rules of origin. The agreement facilitates a freer movement of digital products and services and increases access for several categories of dairy products into the Canadian market. The new agreement also has more stringent local content requirements with respect to core automotive parts and textile products. The agreement also will help clarify cross-border e-commerce transactions, providing Wisconsin businesses with opportunities to sell via their e-commerce platforms to Canadian customers.
No two countries are as closely integrated as the U.S. and Canada. They share the longest international border in the world, and their bilateral relationship is one of the world’s closest and most extensive. More than 30 U.S. States, including Wisconsin, count Canada as their largest export market. Nearly $2 billion in bilateral trade and 400,000 people cross the border every single day between the two countries. Proximity, ease of doing business, a common business culture and rule of law contribute to the already significant bilateral trade base and will ensure that U.S.- and Wisconsin-made goods and services will be well received in this market in the coming years. This unique trade and investment relationship is based on an increasingly integrated supply chain; co-production of new, leading technologies; and the positive flow of people, talent and ideas.
Canada’s stable economic performance, mature and sophisticated market, strong acceptance of and familiarity with U.S. products, similar customer base, and solid integrated supply chain offers excellent business opportunities for Wisconsin exporters with innovative product and service solutions. While many Wisconsin companies focus their attentions on Ontario and Quebec, western Canada with its growing clean technology sector, strong agriculture sectors and growing information and communications technology, artificial intelligence and data sciences markets provide opportunities for Wisconsin companies as well.
While trade has been impacted by the COVID-19 pandemic, the Canadian economy is showing significant signs of recovery in several sectors. Canada is Wisconsin’s largest export market, with $7 billion in goods exported to Canada annually and a bilateral trade value of approximately $11.8 billion. Wisconsin’s close geographic proximity and the similarity in business cultures make Canada a good first step to your success in exporting. Canada has committed to net zero carbon emissions by 2050, with significant reduction targets by 2030. Opportunities in energy efficiency, carbon capture and battery technologies focused on both industrial and consumer markets present a significant opportunity for Wisconsin companies.
With a population of almost 130 million, rich cultural history and diversity, and abundant natural resources, Mexico is among the 15 largest economies in the world and the second-largest economy in Latin America. The country has strong macroeconomic institutions and it is open to trade. Mexico is Wisconsin’s #2 export market, after Canada. Mexico’s recovery from the COVID-19 pandemic in 2021 will rely on several external and domestic factors, including the speed of vaccine deliveries (and the vaccination campaign), U.S growth dynamics, and private investment.
Mexico’s proximity to the U.S. makes it a logical market for Wisconsin exporters. It is the 11th most populous country in the world and is also a relatively young country, with a median age of 27. Building on the benefits of geographic proximity, the U.S.-Mexico-Canada trade agreement gives U.S. exporters an advantage with the reduction of tariffs and the streamlining of other trade barriers such as border processing and licensing requirements for U.S. products coming into Mexico.
Mexico’s growing economy offers Wisconsin manufacturers multiple opportunities to supply capital goods as well as parts and components to production and assembly facilities. Mexico is the seventh-largest carmaker in the world, and major automotive manufacturers are increasing their investments creating opportunities in the second- and third-tier supplier markets. Aerospace is also a growing sector for Wisconsin manufacturers. Additionally, reforms in the energy and communication laws are opening these sectors for Wisconsin companies. Medical devices and renewable energy sources are also excellent sectors for exporters to consider.
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The views or opinions expressed here are solely those of the author(s) and do not reflect those of WEDC. WEDC is not responsible for the contents nor does WEDC guarantee the accuracy, completeness, timeliness or reliability of this information.