Canada now has a new trade deal with the European Union that can hurt American companies trying to compete in Europe.
An American trade deal with the EU is on hold, amid the war of words on trade during this presidential election. The new deal gives Canada tariff cuts in trade realms familiar to this area, like pharmaceuticals and the auto industry, as well as agriculture. It also provides a cut in red tape for doing business in Europe.
"This will give Canadians a competitive advantage over Americans in the European market," said John Manzella, President and CEO of the World Trade Center Buffalo Niagara. "So, very simply, it will put companies on this side of the border at a competitive disadvantage when dealing in Europe and, if we're competing against a Canadian, it puts us at a competitive disadvantage because the Canadians will have preferential access to European markets and we won't."
Canadian Prime Minister Justin Trudeau rushed across the Atlantic to ink the pact and get it started in the ratification process.
"U.S. manufacturers have a tremendous trade deficit with the world, but U.S. manufacturers actually have a trade surplus with our free trade agreement partners. So what does that tell us?" asks Manzella. "It tells us that when we eliminate tariff barriers and when we eliminate non-tariff barriers, U.S. companies and workers can compete with anybody in the world."
Manzella said American companies can do even better if they deal in products with heavy intellectual property issues and highly skilled workers who stay ahead of the competition. For companies that make low intellectual content products, it is hard to compete in the world market and that is hard on low-skill workers.
