Van Loan Says Canada in Early Stages of Mercosur Trade Talks

(Bloomberg)

Canadian Trade Minister Peter Van Loan said the goverment has started exploratory trade discussions with South America’s Mercosur bloc, which consists of Argentina, Brazil, Paraguay and Uruguay.

“While it’s in an early stage yet, we are pleased with the first steps,” Van Loan said on a conference call with reporters.

Mercosur “Too Small” for Brazil, Claims Sao Paulo Federation of Industries

(MercoPress)

One of Brazil’s most influential lobbies, the Sao Paulo Federation of Industries, FIESP, claims that Mercosur is an economic space “too small” given the development and “growing international presence of Brazil”. “Mercosur from a trade angle and Latin America from a political angle are turning to be too small for the global interests of Brazil”, said Rubens Barbosa head of FIESP foreign trade council.

Barbosa pointed out that lately Brazil and China, strong trade allies, have become decisive players in the reorganization of global production, following the 2008 downfall, and are increasingly responsible for the growing presence of developing countries in the international stage and in decision making. Read more here.

Related: Say Bom Dia to Brazilian Businesses (Slate Magazine)

Argentina’s Delay in Dispatching Imports is Irritating Trade Partners

(MercoPress)

Since the controversial Argentine Interior Commerce Secretary Guillermo Moreno announced in an April 23 letter that he will examine overseas purchases to consider the competitiveness of the national market, products worth millions of dollars have been delayed at Argentina’s borders and ports.

Cargoes of cheeses from France, beer from Holland, pasta from Italy, canned pineapple from Indonesia, bell peppers from Peru, and candies from Brazil are among products being delayed, according to the Chamber of Importers, which represents about 300 companies, including local units of Chile’s SACI Falabella and France’s Carrefour SA.

Argentine import restrictions and an exchange rate policy that favored local industry enabled Argentina to build up a record trade surplus of 17 billion USD in 2009 on an overall trade of approximately 100 billion US dollars.

However reprisals could hurt Argentina’s 56 billion of annual exports, mostly food products, equivalent to 17% of GDP. Brazil and the European Union with 45% of Argentina’s exports have warned that such kind of limits are in violation of international treaties and liable to reprisals. Read more here.

New Guide: Doing Business in the Andean Market

(EDC)

EDC has a new practical, hands-on guide designed to help Canadian companies learn about doing business in the five countries in the Andean Region – Bolivia, Colombia, Ecuador, Peru and Venezuela. Register to download your copy from EDC here.

New Regulation for Import Cargo to Argentina

(CIFFA eBulletin)

FIATA has been informed by its member AAACI that the Argentinean Authorities have announced the enforcement of the new regulation AFIP 2744/09 for all Import Cargo to Argentina effective 17 May, 2010 for the C.U.I.T. number resp. on 1 July, 2010 for the Customs Code number. A detailed explanatory document from FIATA is available here.

Canada Promotes Vital Free Trade Agreements with Colombia and Peru

(Agriculture and Agri-Food Canada)

Colombia and Peru are vital markets for Canadian livestock, grain, and pulse producers and the Government of Canada is working hard to quickly pass and implement free trade agreements with both countries. Agriculture Minister Gerry Ritz led a Canadian delegation to Colombia and Peru to advance quick implementation of these important free trade agreements.

Meetings between Canada and Colombia resulted in a clear path that will enable Colombia to fully reopen the Colombian market to Canadian beef and livestock.

“Canada’s Conservative Government is working hard to create opportunities for Canadians producers around the world and we are building a strong relationship between Canada and Colombia as we move forward with our free trade agreement,” said Minister Ritz. “I am confident that we can meet and exceed Colombia’s high quality and safety standards to reopen that market to our beef and livestock this summer.

“This breakthrough agreement gives us a clear direction to once again scientifically prove that Canadian beef and livestock are safe. We continue to deliver the same stringent sanitary and health standards whether we are producing food for Canadian grocery stores or markets around the world.”

In addition to the Andean Community’s ongoing study of Canadian beef and livestock sanitary and phytosanitary systems, it was agreed that the Canadian Food Inspection Agency (CFIA) will provide Colombia with detailed analysis of the two most recent cases of bovine spongiform encephalopathy, complete a technical questionnaire requested by Colombia, and provide updated information about Canada’s livestock and food safety systems and sanitary procedures. Colombia will deliver a final decision within 15 days of receiving the requested information from CFIA. If all requirements are satisfactorily met by Canada, Colombia will fully reopen its market to Canadian beef and livestock. Read more here.

Andean Region Holds Promise

(Export Development Canada – Peter G. Hall)

When it comes to Canadian exports, the Andean region – Bolivia, Colombia, Ecuador, Peru and Venezuela – is not likely top-of-mind. But Canadian exporters and investors have been very active in the region in recent years, and there is much potential for growth well into the future.

Last year, Canada exported $2.1 billion worth of goods to the region. What is more, 2008 growth was about double Canada’s average, at an impressive 19%. This was no flash in the pan, either – growth has maintained a solid, double-digit pace in each of the last four years. Not only that, but over the same period, Canada also saw consistently strong growth in each of the five markets.

Agri-food exports dominate all other industry categories, at about 40% of total regional shipments, yet growth is below the regional average. Machinery and equipment exports together account for a sizable 16% of Canadian exports to the region, and as a group, grew at a 22% pace over the past four years. Other top exports are paper products, minerals and refined petroleum products.

Canada’s activity in the region is not confined to exporting. Canadian firms have undertaken direct investments in the region of over $4.4 billion, over half of which is in Peru. Colombia makes up an additional $1 billion, a tally that is growing by 28% annually. Venezuelan holdings are at $850 million, and rising 15.5% annually. Canada is also importing from the region. Growth in the past three years has been well below export growth, but with inbound shipments of $4.4 billion, is about 2.5 times as large. Crude and refined petroleum account for one third of imports, while precious metals make up an additional 27%. Imports of fruits, nuts and coal are also significant. Read more here.

Everyone’s Wondering: What’s This ‘Americas Strategy’?

(Embassy – Michelle Collins)

Twelve months ago, as Prime Minister Stephen Harper embarked on a tour of Latin America to raise Canada’s profile in the region and demonstrate that his foreign policy would be geared toward these hemispheric neighbours, many took the trip as a sign that he was indeed serious about the Americas.

Yet one year later, there are few updates from the government about what is involved in this pillar of its foreign policy, the mainstream media say there’s no story to report, and most Canadians have nary a notion that their government ever committed itself to an “Americas Strategy.”

On his six-day trip through Colombia, Chile, Barbados and Haiti, Mr. Harper visited aid projects built with Canadian funds, met with Canadian investors, and delivered speeches to economists and business crowds, all with parliamentary reporters in tow.

While in Chile, Mr. Harper delivered a speech declaring Canada a country of the Americas and said that expanding political and economic engagement in the Americas would be a major foreign policy goal for his government. “Re-engagement in our hemisphere is a critical international priority for our government. Canada is committed to playing a bigger role in the Americas and to doing so for the long term,” Mr. Harper said.

Mr. Harper and his officials, such as former foreign affairs minister Maxime Bernier, repeatedly declared that the policy is built on “three key objectives” of prosperity, security and governance.

Since that time, the government has made a handful of funding announcements for increased aid projects in Latin America and moved ahead on free trade agreements with Peru and Colombia. Most recently, Foreign Affairs Minister David Emerson announced that the Department of International Trade was opening four new trade offices in the region; two in Mexico and two in Brazil.

Beyond developments in the area of trade, however, little else about the strategy has been released publicly.

Although a Memorandum to Cabinet on the Americas Strategy was delivered in the last two months, ministers and officials at the Foreign Affairs Department refuse to talk about what’s in it.

When Mr. Harper’s government began ramping up the rhetoric about re-engaging the Americas, Latin American diplomats based in Ottawa were encouraged that this would be their chance to finally reap more of the benefits of globalization and tap into Canada’s economic prowess.

But more than a year later, those same diplomats are left with more questions than answers about what Mr. Harper’s plans really are and are expressing concern that, like other prime ministers before him, Mr. Harper’s commitment to the Americas has tumbled on his list of foreign policy priorities.

Meanwhile, Secretary of State for Foreign Affairs and International Trade Helena Guergis has travelled to the area several times over the last few months, but only her announcements about domestic sports programs get reported in the media.

Additionally, aside from a media advisory, the government says little about the trips and Ms. Guergis herself is difficult to track down. Embassy made several requests to interview the minister about her trip to Belize and Guatemala this past week, but to no avail.

Indeed, Maclean’s political affairs columnist Paul Wells believes that the fact Ms. Guergis is the one being sent on these trips is evidence that the Americas are no longer a genuine priority. “I do get the impression this was an interesting idea, but the idea of an American Canada, understood in the Americas, it’s not automatic, it’s not driven by market forces, not driven by the attention space of ordinary Canadians, and would have to be artificial and built,” Mr. Wells said.

Mr. Wells said “serious distractions” to the west, east and the north – from China to Europe and Russia – are more interesting and geographically closer to Canada. Plus, he notes, Canada’s top foreign policy challenge remains Afghanistan, and the Latin American countries have not made any significant troop contributions to the conflict. “It’s just one example of how far away we are from the idea of this having a concrete application to the rest of the foreign policy universe,” Mr. Wells said.

Toronto Star reporter Allan Woods said that given the way Mr. Harper kicked off this foreign policy strategy, one might expect to have heard more about it by now. He said Mr. Harper’s trip last year was really the first Conservative-led foreign policy initiative since the party rose to power in early 2006, and the government itself billed it as the grandest one up to that point.

Mr. Woods said that at the time, he did plan to follow the issue over the next several months, but that since then, he hasn’t seen all that much happen. “A couple of trips does not a foreign policy make, and a couple of free trade agreements does not a foreign policy make,” Mr. Woods said. “It’s unfortunate because I’ve been on many trips with Harper, and that one was by far the most interesting; it was something of their own making and they just didn’t seem to follow up on it. The onus was on them to explain this.”

CTV reporter Robert Fife points out that if this were a focus, Mr. Harper would be talking about it. He said that if the Conservatives want to promote the Americas, they are going to have to convince people that free trade with these countries is a good thing. “If the prime minister wants to shine a light on it, he usually gets pretty good coverage on any issue he talks about,” Mr. Fife said. “If this issue is such a central plank in the Conservative foreign policy, then it should speak for itself; if you’re not going down there, then it can’t be much of a priority.” Read the complete article.

A Plan B for Deepening Economic Ties in the Americas

(Marcela Sanchez — Washington Post)

It has been a frustrating start of the century for those promoting economic integration of the Americas. The hemisphere seems more ideologically divided than at any time since the Cold War, putting off any hopes of reviving the idea of a Free Trade Area of the Americas, snuffed out two and half years ago in Argentina when regional leaders spent more time emphasizing their differences than anything they had in common.

Those who see a free trade agreement as a way to promote growth, reduce disparity and increase competitiveness are asking themselves what to do next. More specifically, they wonder what can be achieved at the Summit of the Americas to be held in early 2009, when a new U.S. president is expected to attend.

It may be time to try Plan B. Nancy Lee, former deputy assistant secretary for the Western Hemisphere at the Treasury Department, contends that rather than striving for an all-encompassing trade agreement, the region should get more of its fundamentals in order and pursue a narrower goal. In a chapter for the forthcoming book “The White House and the World: A Global Development Agenda for the Next U.S. President,” to be published by the Washington-based Center for Global Development, Lee proposes a regional agreement to improve the hemisphere’s investment climate.

Such an agreement would establish standards for doing business in the Americas, a region where many countries are far behind the average global standard. It would aim, for instance, to reduce burdens on private entrepreneurs by simplifying processes to start up a business, pay taxes, clear customs and access credit.

A hemisphere-wide agreement, Lee argues, both would increase investment and boost growth. It would spread economic benefits to areas and populations so far neglected, especially by permitting “small businesses trapped in the informal sector (to) shift to the more productive formal sector.” Read the complete article.

World Bank Applauds Canada’s Americas Focus

(Embassy – Lee Berthiaume)

A senior World Bank official last week applauded the government’s decision to make Latin America and the Caribbean a foreign policy priority, describing Canada as “one of the few bilateral countries that has an interest in the Americas.”

Pamela Cox, the bank’s vice-president for the Latin American and Caribbean region, also said the World Bank is not calling on Canada or any other country to slow down on free trade talks with the region despite the fact soaring food and energy costs will slow economic growth there.

“Obviously the bank supports free trade,” she told reporters in a briefing at Chateau Laurier. “We think the benefits are huge.... We think the benefits, especially to Latin America, would be large.”

Ms. Cox was appointed to her position in 2005, but said last week’s visit was her first and was intended as a way to recognize Canada’s new commitment to what she described as the “lost continent.”

Latin America has seen a number of ups and downs since the 1970s, she said, but the region as a whole has enjoyed five per cent growth per year over the past five years, partly due to the adoption of sound fiscal policies in many countries, but particularly thanks to strong commodity prices.

She warned, however, that challenges are on the horizon, particularly for countries in the Caribbean and Central America that import both food and fuel.

“We do see growth continuing, probably going down slightly – about 4.5% per year – and we do see some countries struggling a bit,” she said.

Over the past year, Canada has made the Americas a priority; it is channeling more aid to the hemisphere and has launched a robust campaign to ink free trade agreements with a variety of countries in the hemisphere, including the Caribbean Community, Peru, Colombia and the Dominican Republic.

The goal has been to strengthen democracy and open market systems in a region where Canada has more than $100 billion in investments, primarily in the mining and energy sectors, but where populism and socialist policies, including nationalization of industries and natural resources, are on the rise.

Ms. Cox acknowledged the political divide that exists in the hemisphere, particularly South America, but said: “We need to have everybody around the table, no matter what kind of government they have, no matter what their world view.

“Unless you’re around the table and talking, it’s very hard to address global issues and have stability in the world.... Now what we try to do at the bank level, and I think Canada can also have a role in this, is to keep dialogue open and show examples of how people do things.” Read the complete article.