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Free Trade Agreements Come With Heavy Baggage

Thursday, October 1, 2015
EAST GREENWICH, RI – Free trade agreements like the North American Free Trade Agreement (NAFTA) are not necessarily a panacea for American business, according to The Society for the Advancement of Consulting® (SAC).

Looking Beyond Cost Reduction

"My clients have experienced mixed reviews of NAFTA," points out Lisa Anderson, known as The Manufacturing ConnectorSM and President of LMA Consulting Group, Inc., Claremont, CA. "Those clients who are able to reduce costs with NAFTA love it; however, those who have to close up shop or lay off people are not too enamored!

"Certainly, U.S. manufacturers and distributors must find ways to be competitive in order to stay alive and grow. With the Amazon Effect taking hold, lead times are of utmost importance and so manufacturing closer to the customer is gaining in popularity and necessity. There are countless ways to increase performance and profit without looking for low-cost alternatives. My advice is to start there first."

A Combination of Pros and Cons

Dr. Maynard Brusman, a consulting psychologist, executive coach and emotional intelligence-based leadership development expert, notes, "NAFTA is highly controversial. It’s the world's largest free trade area. Estimates are that NAFTA increases economic output in the U.S. by as much as .5% a year."

According to Dr. Brusman, "Does NAFTA's pros outweigh its cons? NAFTA's disadvantages are significant. Can anything really justify the loss of entire industries in New York or Michigan? However, from an economic perspective, NAFTA is a success. Without it, the U.S. could not compete as effectively against the European Union or China. That $1.2 trillion in increased trade is really needed after the 2008 financial crisis. Even more people would be unemployed without it. Balancing the pros and cons of free trade agreements is a necessity for the U.S. when competing in an ever-more-globalized world."

Free Trade Impacts Marketing, Not Just Manufacturing

Organizations need to understand the marketing implications of their free trade-related actions, according to Linda Popky, president of Redwood Shores, CA-based strategic marketing firm Leverage2Market Associates, and author of the new book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters.

"Perception is reality. If your customer base perceives that you have moved manufacturing to cut costs or deliver a lower quality product, they may react negatively to you in the marketplace," she said. "It’s important to understand what drives your brand so you can ensure you are positioning free trade moves in the correct light, rather than hurting your brand."

The Devil is in the Implementation

According to SAC CEO Alan Weiss, PhD, "The best plans on paper often prove horrible in implementation. It’s common to hear as many complaints about NAFTA as praise."

 
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