Canada's Latin American Ties
Canada's Latin American Ties
In recent weeks, Ottawa proved its growing clout in Latin America through a visit from Chilean President Michelle Bachelet, the approval of a trade pact with Peru, and completion of free-trade negotiations with Colombia.
In the last month, Canadian Prime Minister Stephen Harper's administration has scored major commercial deals with Peru and Colombia, and celebrated its successful Free Trade Agreement (FTA) with Chile. Harper's administration has pursued a policy of reengagement with Latin America, seeking to support development in the region. "The Canadian experience shows that, over the long term, there is really no better way to boost living standards than with free trade, " Harper said in a November 2007 interview with Americas Quarterly.
During this week's visit by Chilean President Michelle Bachelet to Canada, the two leaders celebrated the tenth anniversary of the countries' bilateral FTA and signed additional agreements. Harper called the pact a "a model of successful partnership in our hemisphere." Trade in goods between Chile and Canada grew 226 percent over the past decade, reaching $2.34 billion last year. In an effort to replicate the Canadian-Chilean success, Harper¹s government is betting on new deals with other Latin American countries.
Peru's new FTA with Canada, signed on May 29, has supported the Andean country's growing presence in global markets by securing a commercial partner to maintain its enviable GDP growth: 9.2 percent in the first quarter of 2008 alone. It is expected that Canadian agricultural and beef industries will gain immediate access to Peruvian markets. On the flip side, Peruvian dairy products, poultry, and refined sugar will enter Canada almost duty-free.
Canada and Colombia have also moved toward solidifying their trade partnership. Officials from both countries completed negotiating an FTA on June 7. The deal must be ratified by legislative bodies from both countries in order to take effect. If the deal wins approval, Colombian farmers will benefit with tariff reductions on products including beef, flowers, sugar, and ethanol.
The completed negotiations come at a time when a U.S.-Colombia trade pact has stalled in U.S. Congress. Although U.S. markets have historically been the main recipients of Latin American exports, obstacles to the passage of U.S. trade deals in recent months—including with Colombia and Panama—opens the door for Canada to improve ties with Latin America. As the Financial Times reports, “While Washington’s efforts to make trade inroads in Latin America have stumbled lately, Canada has quietly moved to steal a march.”
Ottawa hopes to become less reliant on the slowing U.S. economy. After a weak first quarter performance in 2008—including growing unemployment, negative GDP growth, and rising inflation—Canada has more motives than ever to strengthen commercial ties with new hemispheric partners and is exploring FTAs with Panama, the Dominican Republic, the Caribbean Community, and the Central American Four (El Salvador, Guatemala, Honduras, and Nicaragua).
