Despite Uncertainty Around Protectionism, Businesses in U.S., Canada and Mexico Remain Bullish on Trade and NAFTA, HSBC Study Finds
***Half of firms surveyed expect NAFTA to have a positive impact on
their business over the next two years***
***North American firms more optimistic about business benefits from
NAFTA than other trade agreements***
Despite uncertainty around protectionist trade policies, business
leaders in the United States, Canada and Mexico maintain a positive
outlook for the North American Free Trade Agreement (NAFTA) and its
impact on their firms, according to a newly released report from HSBC ‘Navigator:
Now, next and how for business’.
More than 60% of business leaders surveyed across North America believe
governments are increasingly taking a protectionist stance of raising
trade barriers to defend domestic businesses.
But even amid ongoing renegotiations of NAFTA, half of firms surveyed
(U.S. 49%; Canada 52%, Mexico 53%) expect the impact of the trade
agreement to be positive over the next two years.
“In spite of the threat of new trade barriers, we expect growth in
cross-border business to continue, especially among our North American
neighbors. We’re seeing a lot of optimism from U.S. clients right now
stemming from factors like deregulation, lower taxes, a somewhat weaker
U.S. dollar, climbing energy prices and a rise in global economic
development,” said Wyatt Crowell, Head of Commercial Banking, HSBC USA.
“As the world’s largest trade bank and leading international commercial
bank in the US, we are uniquely positioned to provide end-to-end
coverage: from structuring cross-currency financing transactions, to
supplying access to broader institutional markets and acting as clients’
primary operating and transactional bank.”
The HSBC survey of 6,000 international firms around the world found that
more than three in four (77%) businesses are optimistic about their
international prospects, notwithstanding the worldwide concern among
almost two-thirds of global businesses (61%) that governments are
becoming protective of their domestic economies.
According to the survey, less than one in ten (9%) U.S. businesses
expect NAFTA to inhibit growth -- a smaller share of firms with negative
views of NAFTA than in Mexico (16%) and Canada (13%).
In fact, the survey found that North American firms were more positive
about NAFTA than agreements with trading partners farther from home. For
example, a smaller share of Mexican firms (43%) expected a positive
impact from the Pacific Alliance – a trade block comprising Mexico,
Peru, Colombia and Chile – than from NAFTA (53%). Similarly, Canadian
firms saw less growth opportunity from CETA (43%) and CPTPP (39%) than
from NAFTA (52%).
“NAFTA has significantly benefitted Canada, Mexico and the United
States,” said Linda Seymour, Head of Commercial Banking, HSBC Bank
Canada. “It has facilitated increased trade, improved customer choice,
allowed for the provision of more services and has fostered growth and
greater co-operation among government policy makers and businesses in
all three countries.”
Firms in all three countries remain upbeat about doing more business
abroad, with Mexico leading the way with 87 percent of firms surveyed
expecting increased trade volume over the next 12 months, compared to 77
percent of U.S. firms and 70 percent of Canadian firms.
“NAFTA has become a $1.2 trillion corridor for continental trade and
investment, and represents a good opportunity to business in the three
countries to grow and expand, said Juan Marotta, Head of Commercial
Banking, HSBC Latin America and Mexico. “HSBC has a major presence in
each NAFTA country, making us ideally placed to connect businesses to
opportunities across North America, as well as around the world.”
In all three North American countries, surveyed businesses rank NAFTA
partners as their top two most important target markets for expansion.
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U.S. firms identify Canada (20%), Mexico (19%) and Japan (11%) as
their primary markets for expansion;
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Mexican firms are focused on expansion in the United States (39%),
Canada (27%) and Argentina (10%);
-
Canadian firms see opportunity in the United States (36%), Mexico
(18%) and China (14%)
Other key survey findings include:
Canada
-
To support their expected growth, over half (54%) of the Canadian
businesses surveyed project an increased need for trade finance and
the same proportion (53%) expect their access to trade finance to
increase.
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More than half (57%) of Canadian businesses expect to increase their
volume of trade in services in the next 12 months.
-
Business-to-business (B2B) services as a share of total service
exports are expected to account for just over 50% of total services
export by 2030, up from 42% currently.
-
Almost two-thirds of Canadian businesses agree that data regulation
(62%) and big data (55%) may create barriers to open competition and
cross border service delivery.
Mexico
-
More than two-thirds of the businesses in Mexico surveyed expect to
need more trade financing in 2018 than last year, and a full 70%
expect access to trade finance to get easier.
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For nearly half (48%) of service businesses, entering new markets is
the key approach to growth during the next 12 months, supported by
increasing use of e-commerce (24%). Better use of data (23%) and
upscaling the technology skills of employees (22%) are also considered
among the top three strategies by nearly a quarter of services
businesses
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Services exports, primarily driven by tourism as well as financial
services, will become an increasingly important part of Mexico’s
overall trade mix in the coming decade.
-
Reforms to make Pemex more agile and competitive should help boost
crude oil output in the years ahead, as well as the production of
downstream products such as fuels and chemicals.
U.S.
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In light of the upbeat trade outlook, just over half (52%) of the U.S.
businesses surveyed expect to need more trade finance over the next 12
months. A similar proportion (49%) think their access to trade finance
will improve.
-
As the world’s leader in service exports, the U.S. accounts for an
estimated fifteen percent (15%) of total international services trade,
with business-to-business services dominating the sector.
-
Over a third (35%) of respondents think technology use stimulates
growth in services trade. After entering new markets—the number one
strategy for increasing service trade, cited by a third of
respondents—e-commerce is the second most popular approach.
-
More than three-quarters (77%) of U.S. firms say easier access to data
creates a more level playing field in international business, while
about two-thirds (68%) believe data regulation would impede
cross-border service delivery.
Note to editors:
HSBC Navigator: Now, next and how for business
HSBC Navigator is the most comprehensive report of global trade and
business confidence. It combines an economic forecast of medium to
long-term bilateral trade for exports/imports of goods and services
across 25 countries (by Oxford Economics), and a global survey gauging
business sentiment and expectations on trade activity and business
growth by Kantar TNS.
HSBC’s Navigator helps businesses capitalize on new opportunities and
make informed decisions for the future by understanding the outlook for
international trade.
The full report and country reports including Canada, Mexico and the
United States can be accessed here: www.business.hsbc.com/trade-navigator
HSBC Commercial Banking
For over 150 years we have been where the growth is, connecting
customers to opportunities. Today, HSBC Commercial Banking serves around
1.7 million customers across 54 markets, ranging from small enterprises
focused primarily on their home markets through to corporates operating
across borders. Whether it is working capital, term loans, trade finance
or payments and cash management solutions, we provide the tools and
expertise that businesses need to thrive. As the cornerstone of the HSBC
Group, we give businesses access to a geographic network covering more
than 90% of global trade and capital flows. For more information visit: http://www.hsbc.com/about-hsbc/structure-and-network/commercial-banking.
HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading
international bank in the country. We help companies and individuals
across Canada to do business and manage their finances internationally
through three global business lines: Commercial Banking, Global Banking
and Markets, and Retail Banking and Wealth Management. Canada is a
priority market for the HSBC Group – one of the world’s largest banking
and financial services groups with assets of US$2,522bn at 31 December
2017. Linked by advanced technology, HSBC serves customers worldwide
through an international network of around 3,900 offices in 67 countries
and territories in Europe, Asia, North and Latin America, and the Middle
East and North Africa. For more information visit www.hsbc.ca
or follow us on Twitter: @hsbc_ca or Facebook: @HSBCCanada
HSBC Mexico
HSBC Mexico is one of the leading financial and banking groups in
Mexico, with 971 branches, 5,532 automated teller machines and
approximately 16,000 employees.
Grupo Financiero HSBC is a directly controlled and 99.99 per cent owned
subsidiary of HSBC Latin America Holdings (UK) Limited, which in turn is
wholly controlled by HSBC Holdings plc.
HSBC Holdings plc serves around 38 million customers in 67 countries and
territories in Asia, Europe, North America, Latin America and the Middle
East and North Africa. With assets of US 2,522 billion at 31 December
2017, HSBC is one of the world’s largest banking and financial services
organisations.
HSBC Bank USA, National Association (HSBC Bank USA, N.A.) serves
customers through retail banking and wealth management, commercial
banking, private banking, and global banking and markets segments. It
operates bank branches in: California; Connecticut; Delaware;
Washington, D.C.; Florida; Maryland; New Jersey; New York; Pennsylvania;
Virginia; and Washington. HSBC Bank USA, N.A. is the principal
subsidiary of HSBC USA Inc., a wholly-owned subsidiary of HSBC North
America Holdings Inc. HSBC Bank USA, N.A. is a Member of the FDIC.
Investment and brokerage services are provided through HSBC Securities
(USA) Inc., (Member NYSE/FINRA/ SIPC) and insurance products are
provided through HSBC Insurance Agency (USA) Inc.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is
headquartered in London. The Group serves customers worldwide from
around 3,900 offices in 67 countries and territories in Europe, Asia,
North and Latin America, and the Middle East and North Africa. With
assets of US$2,522bn at 31 December 2017, HSBC is one of the world’s
largest banking and financial services organisations.
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