Trade pacts produce economic opportunities

Michigan State Roundup

Published July 1, 1996  | July 1996 issue

Trade pacts produce economic opportunities

Major economic opportunities for the Upper Peninsula (U.P.) exist as a result of the economic integration of the United States and Canada, according to a Northern Michigan University study.

The study, prepared for the Economic Development Corp. of Marquette, focuses largely on opportunities presented by the Canada-U.S. Free Trade Agreement (CUSFTA), but also considers the effects of the North American Free Trade Agreement that includes Mexico in the trade equation. Harry Guenther, professor of business and finance at Northern Michigan University's (NMU) College of Business, Marquette, and the study's author, cites the following encouraging statistics:

  • The commercial vehicle traffic count over the International Bridge at Sault Ste. Marie increased by 66 percent from 1990 to 1994.

  • Five years preceding implementation of the CUSFTA, Canadian merchandise exports to the United States grew by 24 percent; over the five years since CUSFTA that figure has grown by 70 percent.

  • The three contiguous Canadian provinces closest to the UPManitoba, Ontario and Quebecaccount for 66 percent of Canadian gross domestic product and 80 percent of the value added in manufacturing.

  • The distance between Canada's east and west coasts and between the US Northeast and the Pacific Northwest is shorter via the UP than routing south of Lake Michigan.

The report suggested one way to exploit new economic growth opportunities was to formally establish a trade corridor, with its attending transportation facilities.

In spring the Economic Development Corp. of Marquette County (EDC) and Northern Michigan University sponsored the First Annual Upper Great Lakes Trade Conference to explore the trade corridor concept, similar to the Red River Trade Corridor that straddles the Minnesota-North Dakota border. Nearly 100 development professionals, government officials and community business leaders registered for the two-day conference. The perception of the UP as an "outpost" needs to be changed to that of a hub, says Jay Scherbenske, EDC executive director.

Guenther, who is also director of NMU's Bureau of Business and Economic Research, says that many of the economic opportunities cited in the study could be realized more easily if facilities, such as the airport runways and buildings, were available at the now-decommissioned K.I. Sawyer Air Force base. Suggestions include designating K.I. Sawyer a foreign trade zone and establishing inter- and intra-modal transfer terminal facilities, warehousing and office space, and communications systems for shippers, shipping agents and customs.

But the study's most important point, Scherbenske says, is that it validates what a number of professionals already thought: There's economic viability in searching out strategic alliances. "We need to get past the reluctance that NAFTA created. There are sizable opportunities for everybody," Scherbenske says.

Kathy Cobb