Ramp Up Business With U.S.-Latin America Trade
Affiliated Lawyers of the Americas can help small businesses navigate legalities, opening new opportunities with Latin America trade
All indicators underscore how critical U.S.-Latin America trade is to the U.S. economy. This market alone generates 20 percent of the annual U.S. trade figure. Although U.S. trade with Latin America is eclipsed by that with Asia (37 percent) in terms of total volume, it would be unwise to underestimate this market. Despite coming in second by volume, Latin America is historically the fastest growing U.S. trade partner, outpacing even China, with 82 percent growth from 1998 to 2009, according to U.S.-Latin America Trade: Recent Trends and Policy Issues.
These encouraging figures, along with long-established cultural ties between the two regions, represent huge business opportunities for U.S. firms. Not surprisingly, the U.S. has entered into several free trade agreements (FTAs) with various Latin American countries. These include the regional North American Free Trade Agreement (NAFTA), Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), as well as FTAs with Chile and Peru. In spite of all of these promising arrangements, U.S.-Latin America trade is saddled with bureaucracy in the negotiation and implementation of FTAs. One case in point is the US Colombia FTA which, signed more than six years ago, is still pending Congressional approval. The Congressional red tape has caused an estimated $5,268 million loss to date, in the form of tariffs that could have been exempted, according to Latin Trade Coalition.
Another concern is that multiple FTAs create an inefficient trading system. Each has its own rules of origin to deter non-member transshipment of goods, and related customs administration and enforcement requirements can complicate trade and investment decisions, according to World Trade Organization on Rules of Origin. Rules of origin are the criteria needed to determine the national source of a product reduction or exemption under the FTA. Because of the different sets of rules of origin, identical products exported to different countries may or may not be covered by the relevant FTAs.
Small Medium Businesses and Free Trade Agreements
Not surprisingly, current trade is dominated by large multinational corporations. To give one example, in 2008, small and medium businesses (SMB) made up 86 percent of the 21,600 U.S. companies that export to Colombia and Panama, but in terms of dollar value they only contributed 35 percent collectively, according to Latin Trade Coalition Fact Sheet. SMB owners often fail to take advantage of international trade because (i) they do not realize the scale of the trade and business opportunities (ii) they are intimidated by complex international trade laws and (iii) they do not have business contacts on the other side of the border.
In light of these problems, SMB owners can immensely benefit from professional advice from financial advisors and legal professionals. These professionals can help SMB owners identify the business opportunities in cross-border trade and untangle cumbersome legal and regulatory issues. In this respect, the Affiliated Lawyers of the Americas (ALTA) is a national and international alliance of law firms, financial professionals, and business owners. The majority of ALTA members are themselves SMB owners, who have developed expertise, which in turn determines if the product is eligible for tariff in complex legal and commercial transactions throughout the years, and are willing to share their experiences and perspectives.
