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Canada, the Unwitting Facilitator of the US-Colombia FTA

Pablo Heidrich, 9 July 2008

(An earlier version of this piece appeared in the May 12, 2008 issue of Globe and Mail)

Canada’s government recently declared that the negotiations with Colombia for a free trade agreement (FTA) have been concluded. The text agreed between both governments will now be submitted to each nation’s parliament for ratification. The expected gains are increased access for agricultural and mining goods from Canada, plus better legal protection for Canadian companies investing in Colombia. Interestingly enough, the economic gains for Colombia are rather small and concentrated on flowers and textiles, as 80 per cent of what it sells to Canada already enters duty-free. There are chapters on labour and environmental issues to ensure Canadian state cooperation on these matters, and to provide very limited assurances in respect to inter-national standards.

The discussions in Canada’s Parliament, business, labour and advocacy groups, have been mostly on the human rights connotations this agreement would carry with it. Besides the obvious trouble of pinpointing this dimension of one country in particular while we already trade intensively with several others that have very questionable records, this debate has been obscuring a more obvious and immediate question: why would Colombia ask for so little from Canada to sign this FTA while, apparently, giving up so much in terms of economic opportunities?

Should that question even bother us? After all, Canadian companies, farmers and workers will benefit from such an FTA, right? — at least until US competitors are given similar or better conditions in a US-Colombia FTA, currently stalled in the US Congress. But besides the economic benefits, these negotiations should at least raise some questions amongst us, in Canada, on the wider connections between trade, democracy and human rights in the whole of Latin America. Could it be that there is another deeper and more troubling strategy at play that Canadian Members of Parliament and the general public do not realize? Could it be that Canada is being used as a pawn in a game being played for much higher stakes?

Take, for example, Colombian offers to import duty-free Canadian wheat, barley, potash and other commodities, plus mining equipment and telecommunications technology, and one immediately notes that Canada and the US are the two main contenders in Colombian markets for those goods. One can then recall the recent US Congress’s opposition to a US-Colombia FTA. If Colombia is seen to favour Canada over the US in trade agreements, it is likely to trigger a response from US producers and manufacturers, many of whom will face the disadvantage of 15 to 25 per cent tariffs. In other words, Colombia is offering Canada an FTA because it really wants the US Congress to reconsider its present opposition to a US-Colombia FTA.

And, taking that closer look, does Canada really need to sign an FTA whose biggest promise is to reduce tariffs on commodities that already have record prices internationally, and are already accruing huge profits for its producers? Colombia will most likely eliminate those tariffs on imported foodstuffs from all countries in order to reduce local inflation anyway. Besides, Colombia buys barely 0.1 per cent of our exports, and hosts even less than that of our total investment abroad. If we are seriously interested in closer ties with Latin America, shouldn’t we focus on our biggest trading and investment partners in South America, Brazil and Argentina, rather than on a much smaller economy like Colombia?
Does signing this FTA actually advance Canada’s objective of improving political and security ties with Latin America? The current government of Colombia is one of the most politically isolated in that region, and for good reason. Its regional neighbours are most concerned about Colombia’s abysmal human rights record, the proven links between its government’s parliamentarians and paramilitary groups, and its security policies- especially after Colombia recently bombed Ecuador, a much smaller neighbour, in an successful effort to eliminate a FARC guerrilla leader. The sum of this leads the rest of Latin America to call into serious question the democratic behaviour of the Colombian administration.

Since this FTA is not an effective way of advancing our economic interests and political objectives in Latin America, the question becomes why are we considering this agreement at all?

Back in Colombia, the publicly-stated strategy is that generous preferences offered to Canada in an FTA will trigger huge pressure on the American Congress from displaced US competitors urging the review of the US’s previous decision against signing an FTA with Colombia. Moreover, given Canada’s reputation in the US as a nation that cares for human rights and environmental issues, most US Democrats will be hard-pressed to stop opposing the free trade agreement with Colombia. Most importantly, and key to the FTA discussion in Canada, is that such a trade treaty between Colombia and the US is needed in order to justify and re-confirm continued US military aid to the current Colombian government. Said military aid has amounted to $4 billion thus far.

Therein lies the true connection between human rights and a free trade agreement between Canada and Colombia. Besides attending to voters’ commercial interests in commodity-producing ridings, and mining and telecommunications companies that contribute generously to political campaigning, the government and the opposition parties need to take a wider and more insightful look at the real role that Canada is unwittingly playing in the security and prosperity of Latin America.
We owe ourselves, and our Latin American neighbours, a more influential role than one of simply facilitating US military and economic hegemony.

Pablo Heidrich is a senior researcher on trade and development issues at the North-South Institute, in Ottawa.