Why America's small businesses and entrepreneurs win under USMCA

The United States-Mexico-Canada Agreement (USMCA) was signed by President Trump and his fellow leaders at the G20 in Argentina. The accord modernizes the decades-old NAFTA and is chock full of meaningful provisions that will help American small businesses boost exports and safeguard their intellectual property (IP).

Congress needs to approve USMCA as soon as possible.

Small businesses drive the U.S. economy, and they certainly dominate trade with Mexico and Canada. Thirty million small businesses employ more than 58 million American workers. They also account for roughly half of U.S. GDP. Many small businesses are looking to expand into global markets, and agreements like the USMCA will lower costs and provide more certainty and opportunity.

Many small businesses rely heavily on North American trade to stay afloat. Of the U.S. companies that export to Canada and Mexico, three in four have fewer than 50 employees, and four in five have fewer than 100.

Modernizing NAFTA to strengthen IP protections is an important achievement that will provide a much-needed boost to the U.S. economy. Small firms and startups invest heavily in research and development. They produce 16 times more patents per employee than larger businesses.

This innovation would grind to a halt without patents, copyrights and other IP protections, which prevent rival firms from unfairly replicating and undermining an innovator's creation. Entrepreneurs wouldn't invest in product development and innovative ideas - and neither would outside investors - if rivals could steal the fruits of such labor.

The USMCA bolsters IP protections in several ways.

Consider copyrights, which prevent competitors from stealing creative content like books, movies, music and art. These protections are vital for countless small media and publishing firms. More than 80 percent of U.S. film and television companies have fewer than ten employees.


The USMCA would extend Canada's copyright terms by 20 years, putting them on par with U.S. standards. This change would give U.S. small business owners and their families more time to benefit financially from their creations.

The USMCA also furthers the capabilities of research companies that develop biologic medicines -- drugs derived from living organisms. These firms are set to receive ten years of "regulatory data protection" for their biologics. During that time, no rival firm can use the innovators' lab or clinical trial data to create a knockoff treatment.

The ten-year standard represents a major improvement over Canada's and Mexico's previous standards. Canada used to grant just eight years of data protection. Mexico offered a maximum of five years of protection.

The new, stronger standard will spur additional research in the biopharmaceutical industry, which directly employs more than 800,000 Americans and indirectly supports roughly 4 million other jobs. Big drug companies depend on thousands of small vendors for help in producing lifesaving treatments.

Small entrepreneurial firms also dominate the biopharmaceutical industry. Among pharmaceutical and medicine manufacturing firms, 57 percent have less than 20 workers, and 79 percent have less than 100 employees. This critical industry is about entrepreneurial businesses that innovate, compete with larger firms and bring life-saving drugs to the market.

The USMCA would assist small firms in other ways, too. For instance, it establishes a committee to educate small and medium-sized businesses about ways to expand their exports and reach new markets. This ensures that America's businesses take advantage of every development opportunity in the new deal.

The agreement further takes aim at costly e-commerce trade barriers. Currently, just one in four small businesses sells online -- partly because it's expensive to do so. But in this digital age, e-commerce is essential to business growth. The USMCA makes it easier to sell online by raising the minimum cost of shipments subject to taxes in Mexico and Canada. This allows companies to ship a greater number of e-commerce goods tax-free.

The deal also prevents countries from imposing fees on goods and services traded digitally.

The USMCA would greatly benefit American small businesses and encourage new business creation in America. Congress should waste no time in approving the deal.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.