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Colombia: Canada’s Competitive Edge

Canada's trade with Colombia is growing at a faster rate than US trade with the country.


ORLANDO – As the US-Colombia free trade agreement continues to linger, Canada is seeing increased benefits from its new FTA with the South American country.


“In Colombia [there’s] lot of activity happening,” Peter Van Loan, Canada’s Minister of International Trade, told Latin Business Chronicle during the NAHB International Builders Show here.  “It’s not lost on people that Canada has a bit of a competitive edge right now.”

Canadian lawmakers approved the Colombia FTA in June, two years after officials from
Canada and Colombia had reached an agreement.

Meanwhile, the US Congress has still to approve the US-Colombia FTA 
although negotiations concluded nearly five years ago – in February 2006. It was formally signed by officials from the United States and Colombia in November 2006.


Trade numbers back up Van Loan’s statements. During the first ten months last year, Colombian trade with
Canada grew by 30.9 percent. In the same period, it grew by 22.3 percent with the United States, according to Colombia’s official statistics agency DANE.


The differences were especially clear when it came to selling to the Colombian market. Canadian exports to Colombia jumped 25.1 percent – nearly three times more than the 9 percent increase US exporters posted.


The delay has cost US exporters to Colombia more than $3.2 billion in tariffs that would otherwise have been exempt if the treaty was in place, according to the Latin America Trade Coalition.


Meanwhile, a second Latin America FTA – with Panama – also lingers in the US Congress, more than four years after it was concluded.


US President Barack Obama will discuss his plans for the Colombia and Panama FTA’s in his State of the Union speech on January 25, according to US Trade Representative Ron Kirk. He told Reuters that the administration has no plans to push for ratification of the two Latin American agreements along with the FTA with Korea. Kirk hopes that agreement will be approved before July 1.




In contrast, a Canadian FTA with Panama is advancing in Canada’s legislature and expected to win approval sometime during the next six months, Van Loan says. The agreement was reached in August 2009 and signed in May 2010.


Canada is moving ahead with other free trade agreements with Latin America. “We’re in negotiations with a number of other countries, Central America in particular,” Van Loan says.


Canada is negotiating bilateral FTA’s with Central America rather than as a group, as the United States and the European Union did. The negotiations with Honduras are the most advanced, while talks also continue with El Salvador, Guatemala and Nicaragua, according to Van Loan. It also is in talks with the Dominican Republic.

In addition,
Canada is negotiating a free trade agreement with the Mercosur area that includes Brazil, Argentina, Paraguay and Uruguay. Independent of the success of an FTA with Mercosur, Brazil is a major priority market for Canada. “We have [targeted] new trade in China, India and Brazil,” Van Loan says.

While it has cut back on some activity in other countries worldwide,
Canada has opened several new trade offices in Brazil the past two years.


Canada sees clear benefits from its free trade policy, according to Van Loan.

“We have seen growth in trade – in both directions,” he says. “Since the entry of NAFTA [the North American Free Trade Agreement], trade with
Mexico has gone up fivefold and continues to go up significantly,” he says.

Van Loan emphasizes that FTA’s are not a zero-sum game, but bring greater prosperity and a virtual cycle for both parties. “Anytime you take away government regulations and taxes, business thrives,” he says.


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