Editorial The doors are open

January 1, 1989, holds no magic for Canadian companies that sell their goods or services south of the border. The free trade agreement between Canada and the United States officially went into effect on that date, but there was no floodgate that opened, no dramatic change in the flow of trade.

Nevertheless, there’s been a subtle change that is likely to be felt more obviously over time. It will affect many industries, but it’s likely that Canadian companies providing services for mineral exploration will be among the first to benefit from the free trade agreement.

For one thing, those offering services in the United States will not have to establish an office in the U.S. in order to do business. Previously, Canadian mining consultants, for example, could carry out assignments in the U.S. only if they were assessing investment opportunities on behalf of Canadian companies.

Even then, however, American firms and individuals working in the same business felt they were being denied work that might otherwise have gone their way. Canadians were seen to be taking work away from them. Add to that a currency exchange rate that seemed to indicate that Canadians were offering cut-rate prices compared to Americans, and it’s not hard to understand why American professional groups might not always welcome competition from Canadians.

But Canadians have developed expertise in mineral exploration that is unique and valued all over the world. The heightened level of activity that resulted from flow-through financing during the mid-1980s helped Canadian companies gain experience and develop expertise that those in the U.S. just can’t match.

American companies understandably want to make use of that expertise without going through some elaborate subterfuge in order to hire Canadian experts. Now, with the free trade agreement in place, these Canadian companies and individuals will be better able to sell their services to the U.S. market.

“In the case of mining engineers, geologists and geophysicists, who have at the same time developed important expertise over the past few years, they will see their access to the American market improve (as a result of the free trade agreement) not only because of the simplification of provisions for border crossings, but also because of the greater flexibility which should affect the rules governing the exercise of their profession,” says Jean-Paul Lacasse, a law professor at the University of Ottawa.

But the real test of how successful any Canadian company is in the huge market south of the 49th parallel is the will to go out and do business.

That’s not to say that Canadians need a “pep talk” about the opportunities in the U.S. It means that the opportunities have to be closely examined, their prospective risks and rewards weighed and the costs estimated before forging ahead. Jumping into the Nevada gold rush may result in great success, but that success will be because of sound business planning, not because of the free trade agreement. Economic situations in other areas and involving other commodities may not be as appealing. If one has the will to enter the U.S. market, it will require doing a reasonable amount of homework.

Nevertheless, the door is now open. The free trade agreement will not guarantee Canadian companies success in the U.S., nor will it add directly to a company’s bottom line. It will, however, make it easier to operate in the U.S. Now Canadians will find it easier to take their skills and sell their services to where they’re in demand without giving up their Canadian base of operations.