Rumours are swirling about the possibility that the U.S. will pull out of NAFTA, and preparing for the worst is simply good business sense, according to the Canada West Foundation.
The Calgary-based think tank is set to release a new guide this month that will help small businesses prepare for a possible pullout by the U.S.
Carlo Dade, director of the centre for trade and investment policy with the Canada West Foundation, said the worst time to figure out what to do would be in the midst of the media coverage and frenzy if U.S. President Donald Trump's administration actually does decide to withdraw.
"Have a good conversation now to prevent a possibly business-ending conversation if a miscalculation is made by your U.S. suppliers and partners in the panic surrounding the withdrawal," he said.
On Wednesday, CBC reported that the Canadian government is actively preparing for the possibility that Trump will abandon renegotiations.
The news has impacted stock markets, as well as the Canadian dollar and the Mexican peso.
Dade says movement in markets is often based on rumour, but only a longer shift or an actual substantiation should be cause for concern.
But, that doesn't mean business owners shouldn't be prepared if the news ends up to be more than simply a negotiation tactic.
If the intent to withdraw is signed, merchants will have to dig through the World Trade Organization database and find the information on each product.
Businesspeople should weigh the cost in terms of time and money to hire a customs broker or someone to figure out line items, versus the cost of waiting until the "proverbial hits the fan," Dade said.
"If NAFTA ends, we're moving into a situation where you're going to have to look at every single item that goes back and forth across the border and decide if there are tariffs, and if there are tariffs, what those tariffs are," Dade said.
And those items can get pretty specific. For example, if you were shipping beef, you'd likely have to specify if it were pre-sliced, or roasted.
"You really have to get down, suddenly, to the nitty-gritty."
The Canada West Foundation worked with chambers of commerce in western Canada to design its guide, which will be available for free.
It will include a list of resources as well as examples of how businesses could be impacted.
The second-last round of NAFTA talks is set to be held in Montreal in late January.
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