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The Americas are the most important international market for U.S. middle market companies, with Canada and Mexico ranking as the first and second most important trading partners.
Internationalized middle market companies get more than 16% of their revenue, foreign and domestic, from the Western Hemisphere. Trade and investment flows between the United States and Latin America and the Caribbean have surged over the past 20 years on the back of economic growth; Latin America’s extensive privatization, deregulation, and trade and investment liberalization; and the formation of free trade agreements among the United States and Mexico, Central America, Chile, Peru, and Colombia. Latin America is a significant trading partner for the United States, consistently making up 20-25% of total U.S. exports and imports. Notably, U.S. businesses export over three times more to Latin America and the Caribbean than to China. From 2000-12, U.S.-Latin America trade more than doubled, growing faster than U.S. overall trade and U.S. trade with Asian economies.
With the maturation of the North American Free Trade Agreement (NAFTA) launched in 1994, the United States, Canada and Mexico have increasingly become a single, integrated production zone. These trends notwithstanding, most U.S. companies have yet to fully exploit growth opportunities in the Americas— and middle market companies in particular are leaving money on the table by not taking sufficient advantage of opportunities to sell and buy in the Western Hemisphere. With global demand slowing and labor costs rising in China, and with Brexit likely to have negative impacts on U.K. and Continental growth, middle market leaders have as much reason to look north and south as they have had to look east and west for new pockets of growth and supply chain efficiencies.
Demand is growing robustly in the economies of many U.S. free trade agreement partners in the Americas; Latin America’s planned investments in infrastructure are opening up new export opportunities for U.S. equipment manufacturers and engineering services; and, using smartphones to buy online and having more disposable income, Latin American consumers are an increasingly vibrant market for U.S. retailers. The Trans-Pacific Partnership, which includes U.S. FTA partners Mexico, Chile and Peru, along with the overlapping 300 million consumer market Pacific Alliance free trade area formed by Mexico, Colombia, Peru, and Chile, would offer U.S companies new production platforms and sales opportunities in Latin America.
While many U.S. middle market companies are already actively tapping these markets, little is known about their performance, future plans, or lessons learned. This report helps fill that gap. This report pioneers in mapping the middle market’s existing trade and investment relations in the Americas and globally and to analyze the risks and opportunities that middle market leaders perceive in the Americas. This report also identifies gaps in policy and access to financial and other support that hold back the middle market, and strategies that executives can follow to win more business in the Americas.