Today, Canada and Peru will sign a historic free-trade agreement, representing the first commercial agreement negotiated with a Latin American nation under the premiership of Conservative Stephen Harper. A similar FTA with Colombia will follow soon, and there is still talk of resurrecting negotiations for an agreement with four Central American countries. With prospect for the U.S. trade agreement with Colombia now looking dim, Canada can take the lead in the drive to create a Free Trade Area of the Americas.
Stephen Harper has several reasons to play a central role in promoting the FTAA. Canada is the second-largest economy of the Americas, and also one of the most open to international trade and investment. Trade with Latin America and the Caribbean, however, represents less than five percent of Canada’s overall foreign trade. A well-functioning FTAA would increase the flow of trade both ways.
The realignment of forces in Latin America — the populist Left making inroads throughout the region, and President Bush’s low political capital — has left the FTAA in the lurch. Given Harper’s credentials as a strong advocate of free markets, he could bring the leadership necessary to get things done. Harper would find strong allies in other free-traders in the region, such as Presidents Alvaro Uribe of Colombia, Alan García of Peru, and Oscar Arias of Costa Rica.
Canada has a particularly good image in the rest of the hemisphere. For those who have followed the FTAA debate in recent years, it has become increasingly difficult to distinguish the anti-trade rhetoric from the anti-American discourse. A hemispheric free-trade area is seen in much of Latin America as yet another U.S. attempt to subjugate the region — and populist leaders like Venezuela’s Hugo Chávez play this card pretty well. Though the U.S. would naturally remain a key player in Latin American affairs, Harper could become a leading voice for promoting further free trade in the Americas.
Much of the opposition to the FTAA comes from leaders of countries, notably Brazil and Argentina, who are angry over heavy agricultural subsidies in the U.S. Canada also throws money at its farm sector, but most of its subsidies go only to milk and poultry products, which Latin American countries already exclude from most of their trade deals anyway. Even if Mr. Harper assumed a more prominent role in promoting the FTAA, some South American countries would probably still resist it, but Canadian leadership could nonetheless help move the ball forward.
Besides the agreement reached with Peru, Canada has already enacted free-trade agreements with a handful of Latin American nations (Mexico, Costa Rica, and Chile), which have been beneficial for all. Canada is now exploring or negotiating more bilateral deals with other countries in Central America, the Andean Community and the Caribbean. These agreements could serve as a firm base for broader multilateral negotiations.
Finally, the agreement with Peru affords Harper a fantastic opportunity to increase Canada’s geopolitical relevance in the hemisphere. Though Latin America itself might seem irrelevant to a member of the G-8 — compared with the opportunities and challenges presented by other continents such as Asia and Africa — the potential is there, and this is a chance to lead a project that would improve the lives of millions of people.
Harper seems to understand this. In a speech he gave to the Council on Foreign Relations in Washington last year, he pointed out that “more open trade in the hemisphere is consistent with our values and in all of our interests.”
The desire to pass trade agreements seems to have passed in the U.S. But Latin America still needs someone to lead the way, and Stephen Harper can do it.
– Juan Carlos Hidalgo is project coordinator for Latin America at the Cato Institute’s Center for Global Liberty and Prosperity.
Editor’s Note: This article has been amended since its initial publication.