New Trade Agreement Supports Direct Selling and Encourages Its Business Model

After months of negotiations, a new trade pact has been reached for the North American regional market.

The U.S. Mexico Canada Agreement (USMCA) renews and modernizes the existing trade relationship between the three countries. It is one of the largest multi-lateral trade agreements, worth $25 trillion today, three times the market value when NAFTA was introduced in 1994.

Although some of the primary issues included hotly debated topics related to the automotive and dairy industries, there are other matters of notable interest. Specifically, each of the three governments participating in the negotiations agreed to support the direct selling distribution channel.

The reference appears under the Cross-Border Trade in Services chapter, Article 15.10. Addressing small and medium-sized enterprises, the article acknowledges direct selling services as an “SME-enabling” business model.

With a view to enhancing commercial opportunities in services for small and medium-sized enterprises (SMEs), and further to Chapter X (Small and Medium-Sized Enterprises), each Party shall endeavor to support the development of SME trade in services and SME-enabling business models, such as direct selling services, including through measures that facilitate SME access to resources or protect individuals from fraudulent practices.

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Positive mentions of this business model in other trade agreements will contribute to promote direct selling as a mainstream distribution channel and encourage government support globally to this type of business model.

Recently, the U.S. government announced intentions to open negotiations on trade pacts with Japan, the U.K. and the EU. In addition, China is currently negotiating no fewer than ten global trade agreements and the U.K. is negotiating three additional agreements. Opportunities to proliferate this language will help to expand the presence of the direct selling distribution channel around the world.

The World Federation of Direct Selling Associations reported that the global direct sales market value in 2017 was $189.6 billion with growth in the number of distributors for each of the last four years. It is a business opportunity that more people are considering every day, and governments are rising to the challenge to recognize its importance.

Several milestones must be met before Congress discusses the USMCA in January 2019 or later. And a potential shift in political agendas based on a new Democrat majority in the House could pose significant hurdles for the agreement’s ratification. So, until the agreement is approved by each of the three governments, it is imperative to demonstrate our continued support.

Randall PopelkaRANDAL L. POPELKA—serves as vice president of Global Government Affairs at Herbalife Nutrition. Based in Washington D.C. he works on a variety of policy issues for the company with the U.S. and foreign governments. He is also responsible for managing industry relations, helping ensure Herbalife Nutrition continues its industry leadership role in advancing healthy, active lifestyles, balanced nutrition, and financial empowerment.