CCCE Chief Executive Outlines the Case for a Canada-Colombia Free Trade Agreement

May 28, 2008

Good afternoon ladies and gentlemen.

I will present a brief introductory statement and then my colleague Sam Boutziouvis and I will be pleased to answer any questions.

As representatives of the Canadian Council of Chief Executives (CCCE), we are pleased to be here today to discuss the proposed Canada-Colombia Free Trade Agreement.  Over the next ten minutes I intend to offer a compelling case for the Government’s current negotiations toward a Free Trade Agreement with Colombia and to address a number of human rights, labour and environmental concerns.

First, an ambitious, comprehensive Canada-Colombia Free Trade Agreement would  enhance access to a new and growing export market.

With a population of more than 45 million people and strong economic growth, Colombia represents an important market for Canadian products and services.  The potential of Colombia has not gone unnoticed by Canadian companies.  More than 1,000 Canadian enterprises are engaged in commerce with counterparts in Colombia.  The current level of Canadian foreign direct investment in the country is about $3 billion and is expected to increase as we move closer to conclusion of the Agreement.  Canada’s annual exports to Colombia have more than doubled in the past five years, to $660 million.

The proposed Agreement would benefit companies and workers in a wide range of industries, including the automotive sector, steel, chemicals, public infrastructure development, oil drilling, environment and engineering services, information technology products and services, agriculture, fertilizer, paper and other forestry products, copper products, textiles, apparel and footwear, mining and advanced manufacturing such as mining machinery and equipment.   A Free Trade Agreement that is ambitious, comprehensive and offers reciprocal access will raise awareness and further open this dynamic and growing economy to Canadian know-how and ingenuity well beyond the products and services I have just listed.

Canada’s business community would strongly support a Canada-Colombia Free Trade Agreement that includes the following provisions:

• Greater access to government procurement.
  
• Liberalization of the services sector.
  
• Strengthened protection for Canadian patents, trademarks, and trade secrets.
  
• Improved customs facilitation.
  
• Greater benefits for small and medium sized exporters.
  
• Reform of the domestic legal and business environment to encourage business development and investment.
  
• A agreement to prevent double-taxation.

Second, a Canada-Colombia Free Trade Agreement would level the playing field for Canadian workers, farmers, and businesses.

The Canadian market is already open to Colombian imports.  Last year, more than 80 percent of what we imported from Colombia entered Canada duty-free.  A free trade agreement would give Canadian businesses, farmers, and workers similar access to this important market.  As you have already heard, Colombia imposes tariffs averaging 11 percent on industrial goods, 17 percent on agricultural products — including 15 percent on wheat — as high as 80 percent on beef products, and 15 to 20 percent on cotton yarns and paper products.  The elimination of these tariffs would greatly benefit Canada.

It is vital that we keep in mind the international context.  For example, the United States has completed its own free trade negotiations.  Meanwhile, Colombia is pursuing liberalized trade with the European Union, the members of the European Free Trade Association, Chile, Mexico and others.

Canada must not fall behind, lest we be rendered less competitive and possibly shut out of the market by more aggressive negotiators.

Third, a Canada-Columbia Free Trade Agreement would contribute to economic growth and poverty reduction in Colombia.

Reforms introduced over the past decade have served Colombians well.  As recently as 2006-07, the World Bank listed Colombia as one of the world’s top ten economic reformers.

Last year, Colombia’s economy grew by 6.6 percent.  The International Monetary Fund expects that over the next five years, annual economic growth will average an impressive five percent.  Unemployment has dropped from 16 percent in 2002 to 10 percent last year.  An estimated 10 million Colombians have been lifted out of poverty in the past five years.  Wages have been rising for five straight years, and inflation has declined to about five percent.

The conclusion of a Canada-Colombia Free Trade Agreement would signal Canada’s strong support for the pro-growth initiatives of President Alvaro Uribe, and would further increase confidence in doing business in Colombia.

Fourth, a Free Trade Agreement would strengthen democratic reforms and human rights in Colombia .

Contrary to what you may have heard from earlier witnesses, recent history demonstrates beyond question that pro-market reforms encourage the development of the democratic institutions that are so important to the effectiveness of a functioning government.  They deepen relations among countries and improve the protection of human rights.

The increased economic activity that would result from a free trade agreement would create more and better jobs, and more opportunities in the formal economy. It would discourage corruption and enable the government to make additional investments in institutions that promote the rule of law and greater transparency. 

Less than a decade ago, Colombia was thought by many to be a failing state.  As recently as 2000, much of the country was controlled by terrorist groups and ruthless drug cartels. Much more needs to be done, but Colombia’s transformation in the past few years has been nothing short of remarkable.

The facts speak for themselves.  Since 2000, levels of general violence have been reduced by 40 percent. The murder rate has dropped 40 percent, kidnappings have dropped 83 percent, and terrorist attacks on public infrastructure have declined 76 percent.

Free trade and stronger economic growth will bring new opportunities for the informal and illicit economies that for too many years have been dominated by the drug trade.  Already, growth and greater openness have resulted in the demobilization of more than 40,000 paramilitary fighters. Fully 95 percent of them have successfully reintegrated into mainstream Colombian society.

Let me be clear.  Violence continues to plague Colombia. The social and economic costs of conflict are high.  But the problems that remain are being dealt with successfully.

Colombia has a vibrant democracy with a long history of free elections, a free press and effective opposition parties.  Importantly, the Colombian people have given President Uribe’s government an 80 percent approval rating.  Colombia is on the right track.

Fifth, a free trade agreement with Colombia is a vital element in Canada’s strategy of reengagement in the region.

For far too long, Canada has been a fair-weather friend to our neighbours in the southern hemisphere. Fortunately, this is now changing. Building on our existing Free Trade Agreements with Chile, Costa Rica and now Peru, Canada’s government is currently negotiating with several Caribbean and Central American countries. A Free Trade Agreement with Colombia would anchor Canada’s strategy of increased engagement in the Americas.  Not since our accession to the Organization of American States, and the signing of the landmark Free Trade Agreement with Chile, has Canada been so constructively engaged in this hemisphere.

The Canadian Council of Chief Executives is convinced that these negotiations are in the economic and strategic interests of both Canada and Colombia.  We will, of course, have to await the outcome of the negotiations before determining whether the agreement itself is sufficiently ambitious and comprehensive.

Delaying or canceling these negotiations would send the wrong signal to the people of Colombia.  Any postponement would constitute a commercial and foreign policy setback.

It is my understanding that the Government of Canada is pursuing high-quality labour and environmental accords in conjunction with the proposed Free Trade Agreement, with recourse to dispute-settlement mechanisms.  In addition, our Government is committed to working closely with Colombia in the areas of corporate social responsibility and capacity-building.

Regrettably, some labour representatives and political activists have said that it would be wrong to negotiate such a free trade agreement until Colombia improves its human-rights record. In my view, this represents a misdirected effort to derail an initiative that would greatly benefit the people of Colombia and the cause of democracy.

A moment ago I referred to the dramatic decline in violence in Colombian society. Let me offer a few more examples that illustrate the rebuilding of trust and enhanced sense of security.  In 2002, some 131 mayors throughout Colombia were forced to exercise their duties and responsibilities from outside their municipalities.  Today, all of Colombia’s mayors live and work in their respective municipalities.  Ridership on Colombian roads has doubled since 2000.  The number of tourists visiting Colombia has doubled in the past five years.

The International Labour Organization apparently agrees with the direction of human rights and labour reforms in Colombia. For the first time in 20 years, the ILO has removed Colombia from its labour watch list.

To reiterate, Colombia continues to experience significant social, human rights, and poverty-related challenges.  The good news is that Colombia is making progress.  We should encourage these economic and democratic reforms. Far from walking away, we should engage the country’s leadership as much as possible.

Conclusion

In summary, Mr. Chairman, Canadian workers and businesses of all sizes would benefit from the successful negotiation of an ambitious, comprehensive Canada-Colombia Free Trade Agreement. Furthermore, it is in Canada’s interest to engage with countries such as Colombia that are committed to democracy, the rule of law, peace, and greater security.  Successful conclusion of this agreement would offer better protection for workers and for the environment, while strengthening capacity-building and corporate social responsibility.  For all of these reasons, it is vital that Canada forge a stronger relationship with the people of Colombia.

Thank you for your time,  and we look forward to your questions.