By Robertson, Colin
Americas Quarterly , Vol. 5, No. 4
In August, on his fourth offi cial visit to Latin America, Prime Minister Stephen Harper set out to reboot Canada's on-and-off-again relationship with the region. In the fi rst stop on a four-country tour that took him to Brazil, Colombia, Costa Rica, and Honduras, Harper declared in São Paulo that "during too long a time we neglected relations[...] too much grass grows in the cracks on the road. It is time," he added, "for increased ambition."
Ambition is important. But so is perseverance.
Canadian efforts in the Americas are characterized by quixotic spasms of tango-like embrace: joining the Organization of American States (1990); negotiating the North American Free Trade Agreement (NAFTA, 1993-1994); and committing to the Free Trade Area of the Americas (1994)-all nearly 20 years ago. But this rush of engagement was followed by a long siesta until 2007, when the Harper government announced its Strategy of Engagement in the Americas, which emphasized democratic governance, prosperity and security. The plan is only now taking shape.
It does take two to tango, and Latin American governments share equal responsibility for failing to take advantage of Canadian interest and opportunities.
So what makes Harper's newest effort different?
First, there is the economic malaise in the United States and the recognition that Canadians really do need options to the U.S. market. Agree or not with Standard & Poor's' reevaluation of American creditworthiness, there is no disagreement with its analysis that "the effectiveness, stability and predictability of American policymaking and political institutions have weakened."
For Canadians, the U.S. market and the bilateral relationship will always remain primordial, but as the U.S. hunkers down and the administration focuses on a "jobs" agenda, there is a likelihood of renewed protectionism-which could affect the huge Canada-U.S. resource trade in everything from lumber to fi sh. Notwithstanding President Barack Obama's promise to export his way out of the economic malaise, certain Democrats and Tea Party Republicans equate free trade with the outsourcing of jobs. And that may impede further efforts to broaden the opportunities for Canada under NAFTA.
While Canadian and U.S. negotiators are in discussions to ease border access for people and goods, these steps alone will not strengthen the Canadian market. Canada must look to new opportunities to hedge its bets.
That is being done slowly in Latin America. On August 15, a free-trade agreement (FTA) with Colombia- an economy equal to the state of Connecticut-went into effect, and new implementing legislation for the Canada-Panama Free Trade Agreement (similar in economic weight to Vermont) is being introduced in Parliament this fall. Canada also has FTAs with Costa Rica, Peru and Chile.
Beyond FTAs, Latin American countries are making it easier for Canada to invest and do business in the region. A decade-long dose of the Washington Consensus, whatever its faults, has rinsed away the previous attachment to the Prebisch-inspired statism that stigmatized earlier efforts at boosting investment and terms of trade.
Mexico is a prime example. The World Bank and International Finance Corporation's Doing Business 2011 report declared this NAFTA partner as the easiest place in Latin America to run a company. The International Monetary Fund says Mexico's economic growth will eclipse that of the U.S. and Canada from now until 2015, and Goldman Sachs predicts that in 40 years Mexico will be the world's fi fth-largest economy-bigger than Russia, Japan or Germany.
Third, Canadian business is prepared for risk, recognizing that the options are either grow or get absorbed. Twenty years of freer trade have given Canadian companies, especially the larger ones, the confi dence that they can compete internationally and the experience of operations on the global stage. …