Canada advances in the world cup of free trade, leaving the United States behind.
BY JOACHIM BAMRUD
LIMA – While Canada is not playing at the World Cup in soccer it did score a goal in the world cup of trade today when its Senate approved a free trade agreement with Colombia, beating the United States, which still has not approved its own four-year old FTA with the South American country.
“I hope the U.S. congress gets the message,” Humberto Jose Gomez, president of the Colombian Private Council on Competitiveness, told the Business Future of the Americas here today. “If not we will soon buy more from the Canadians.”
The Business Future of the Americas is organized by the American Chamber of Commerce in Peru as part of the mid-year meeting of the Association of American Chambers of Commerce in Latin America (AACCLA).
Myron Brilliant, senior vice president for international affairs at the U.S. Chamber of Commerce, also referred to the successful passage of the Canada-Colombia FTA. He said he understood the frustration at the American Chambers of Commerce in Colombia and Panama over the U.S. congressional delays in approving FTA’s with those countries. The U.S.-Colombia FTA was signed in November 2006, while the U.S.-Panama FTA was signed in 2007.
“If we want to increase our exports, we need to move on the FTA’s,” Caterpillar Chairman and CEO James Owens told the forum here yesterday. “It’s a two-way street. We need to show the world we’re open for business.”
In the case of Colombia, Caterpillar is especially keen to avoid the additional costs of tariffs that exist without a free trade agreement. “Colombia is a larger market for us than either Germany or Japan,” Owens said.
The Canada-Colombia FTA was signed in 2008, or two years after the U.S. FTA. In many cases, initial opponents of the Canada FTA with Colombia cited the same concerns as their U.S. counterparts on labor and human rights issues in Colombia, but were still able to reach an agreement that made it possible to ratify their FTA with Colombia.
Colombia last year had the best performance of Canada’s trade partners in Latin America, according to a Latin Business Chronicle analysis of data from Statistics Canada. Two-way trade fell 0.9 percent to 1.3 billion Canadian dollars (US$1.3 billion). That was the lowest decline among Canada’s partners in Latin America and compares with an overall 12 percent fall in Canada-Latin America trade in 2009.
Colombia’s exports to Canada managed to grow 14.9 percent to 733.7 million Canadian dollars, while Canada’s exports to Colombia fell by 15.1 percent to 601.6 million Canadian dollars.
By comparison, U.S. trade with Colombia fell by 15.3 percent last year thanks to a 17.3 percent fall in U.S. exports and a 13.5 percent reduction in Colombian exports.
However, there is no sign that neither the Obama Administration nor the U.S. Congress is any closer on pushing for passage of the Colombia and Panama FTA’s. “I will continue to work towards resolving the outstanding issues in the free trade agreements with Panama and Colombia,” Francisco Sanchez, U.S. Under Secretary of Commerce and International Trade, told the Business Future of the Americas yesterday.
Brilliant sees a window of opportunity between the period after the November U.S. congressional elections and the fall of 2011 for U.S. passage of the Colombia, Panama and Korea FTA’s. Owens agrees. “I’m certain that in one year or two we will get those through,” he said.
BEYOND THE UNITED STATES
Meanwhile, both Colombia and Panama are moving ahead with closer trade ties with other markets. Both countries signed free trade agreements with the European Union last month.
And Panama has also signed FTA’s with Singapore, Taiwan, Chile and Canada, Commerce Minister Roberto Henriquez pointed out at the forum yesterday. The Canada-Panama FTA was signed last month.
Panama-Canada trade fell 11.4 percent last year to 132.1 million Canadian dollars, but is expected to grow this year thanks to the economic recoveries in both Panama and Canada as well as the new FTA. One area with strong potential for exports to Canada is mining. “Panama has the largest unexplored copper deposit in Latin America,” Henriquez said.
Panama also hopes to sign free trade agreements with the European Free Trade Association (Iceland, Lichtenstein, Norway and Switzerland), the United Arab Emirates, South Korea, Colombia and Peru, he said.
The Panama-Colombia talks are already underway with two rounds of negotiations concluded. And Colombia concluded its third round of talks with South Korea last week.
Meanwhile, China is also stepping up its trade ties with Latin America through FTA’s and growing business.
“I don’t fault Latin America for looking at opportunities for export growth – whether in Latin America or with Europe or Asia,” Brilliant says. “That makes sense. Where I worry is that America is not active….If we’re not prepared, countries will look elsewhere.”
And growing Chinese trade with Latin America, at the expense of U.S. trade, will also hurt Latin America, he argues. “What America brings is more than just a big market,” Brilliant says. “We bring best practices [and] our values. The Chinese are mostly interested in acquiring resources.”
However, despite those kinds of warnings, the continued paralysis of the U.S. free trade agenda makes China more attractive than ever for Latin American countries.
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