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APICS Supply Chain Management Now

What’s After NAFTA?

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE - January 10, 2014

Supply Chain Management Now

This month, the United States, Mexico, and Canada celebrate the 20th anniversary of the North American Free Trade Agreement (NAFTA), and according to news sources from the Economist to NPR, there is reason to celebrate.

“Industries from aerospace to cars have woven supply chains back and forth across North America’s borders,” the Economist reports. “Of the trio, Canada’s GDP per person has grown fastest over the past two decades, but Mexico—an emerging market hitched to two larger, rich ones—has been NAFTA’s biggest beneficiary.” Manufacturing productivity in Mexico has improved in the face of import competition, foreign investment has risen significantly, and the partnership has demonstrated to other countries the Mexican government’s commitment to open markets.

Not surprisingly, NPR examines NAFTA from a different view. It reports that, now, supermarkets in the NAFTA countries showcase a variety of fresh fruits and vegetables all year long—even in the dead of winter, when Mexico can still export fresh produce. NAFTA eliminated crippling tariffs and encouraged investment in Mexican farms. “That has helped create year-round supply and demand for US and Canadian customers.”

The Economist editors contend, however, that there’s more to be done and the agreement needs to evolve. “First, the business of shipping goods across borders needs an overhaul.” The wait times to cross from Mexico into the United States are too long, the infrastructure and procedures for hauling are critically outdated, and pre-clearance of goods is hindered by needless bureaucracy.

Next, under the subhead “bridges, not moats,” the editors suggest the United States, Canada, and Mexico work together to negotiate trade deals with other countries and consider new members into NAFTA from Central America, the Caribbean, and other parts of Latin America.

Lastly, the article urges NAFTA countries to make it easier for workers to cross borders. “The United States is not about to embrace European-style open borders, but more generous dispensations for frequent travelers from Mexico would be a start,” editors recommend.

Enabling international supply chains

Consider the following definition from the APICS Operations Management Body of Knowledge Framework: “A [Free Trade Zone (FTZ)] … is an area considered outside of the host country’s territory but supervised by its customs department. Material may be brought in to the FTZ without paying import duty taxes and assembled or manufactured into a finished product. Duties and taxes are then paid when the finished good is moved outside the FTZ for retail sale.”

While there’s no doubt that trade agreements and trade zones can boost business, they complicate supply chains. Business leaders rely on supply chain professionals to identify and overcome any difficulties; thus, enabling success. Are you ready to lead your company’s supply chain efforts, even as they become increasingly complex? APICS can help. Consider earning the APICS Certified Supply Chain Professional (CSCP) designation, the most widely recognized credential for supply chain and operations management professionals in the world. By earning your CSCP, you demonstrate a mastery of supply chain management best practices and specialized, high-level knowledge and skills.

I encourage you to take the next step in your career, preparing your employer and yourself for the future of business supply chains.

1 Comment

  1. 1 Kimberly 09 Jun
    Thanks for the read, you bring up some interesting points about distribution and the problems some of us 3PL experts are facing. Its no surprise that the there's gonna be these bureaucratic speedbumps shipping products over borders when they are the same way with humans and borders. Wouldn't expect anything less...I have recently been looking to apply at a few Los Angeles companies, www.spexpress.com being one of them, and am thinking a CSCP is probably to really get a chance at a reputable third party logistic company. I have been doing pick and pack services for a number of 3pl companies the past 10+ year, and agree with the economist article-  NAFTA still is leaving us with a lot of unnecessary headaches for international order fulfillment and other pick and pack services outside of just the US.

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