This article was originally published in Global Trade Magazine on April 20, 2018
By Bernie Hart, Vice President in Livingston International’s Global Trade Management Practice
The threat of a US NAFTA withdrawal has significantly dissipated in recent weeks, giving way to optimism and a sense of relief among those corporations that spent more than a generation making investments into expansive continental supply chains.
While widespread relief from America’s biggest industries and corporations would have been unsurprising, the response thus far has been somewhat muted. Perhaps that’s because many of them predicted and quietly expected the negotiations would ultimately leave the trade landscape relatively unaltered.
Recent research by Livingston shows two-thirds of large businesses across the US and Canada believed the negotiations would either be successful or would linger for an extended period until policymakers ultimately agreed to leave the agreement unchanged.
To their credit, a healthy contingent of large businesses that currently make use of NAFTA chose not to take a wait-and-see approach and began developing contingencies in the event of a worst-case scenario (i.e. a US withdrawal from NAFTA).
But the percentage of big business planning for the worst isn’t as great as one might think. Only 18 percent said they have developed contingency plans, while just more than half said that while they were concerned about a potential negative outcome, they had only a general sense of how a U.S withdrawal might affect their business and weren’t yet making contingencies. An additional 18 per cent said they hadn’t considered the outcome of the negotiations or the impact to their business at all.