Latin American governments privatize a full range of industries: telephone, electricity, water, power, banking, transportation, and others. Though these reforms have made transacting business in Latin America easier, there are still challenges. In addition to the transactional challenges that still exist, there is now further competition from the expanding activities in the hemisphere of China and India.
If Canada is to achieve the mandate to take advantage of emerging markets, as laid down by Minister of Finance Flaherty in Advantage Canada, the government and the private sector need to redouble their efforts on Latin America. We should be under no illusion that anything less than a unified and aggressive effort will yield the desired results.
Before listing our five concrete recommendations, I will digress for a minute to illustrate the kind of unified effort we believe is necessary. Before the 1990s, Spain had negligible investment in or trade with Latin America. I worked for a Spanish company at that time and lived in Madrid. For a number of reasons we can discuss later if you wish, Spain became the dominant foreign investor in Latin America through the 1990s.
Why do I raise the Spanish case? It's because the successful Spanish reconquest of Latin America was a national goal. It was the product of a union of strategic government planning and business drive. The government took political and economic leadership, a long-term view, and bolstered its fiscal and trade policies with all manner of support for business chambers, exchanges, and other outreach.
We may never reach the level of government commitment toward Latin America commensurate with that exhibited by the Spanish government; however, I would suggest that the Canadian government has not even exhibited a sustained strategic vision for bolstering Canadian commercial activity or political engagement in Latin America. This clearly has not and will not benefit Canada or Canadian business.
We have five recommendations. The first is support for business facilitation programs. Canada's trade commissioners in Latin America, provincial export promotion agencies, Economic Development Canada, and other government agencies have provided excellent service. They are particularly vital for SMEs that have the will but not the contacts, know-how, and resources to tackle new markets, particularly in Latin America, without logistical support. Unfortunately, these support programs appear to be chronically underfunded and have had to be cut back. We urge the committee to examine the full range of services provided and the funding of those services, particularly in light of what our competitors are providing.
Our second recommendation is on support for business partnerships and outreach. The Canada hemispheric economic relationship cannot achieve its full potential without having stronger partnerships between private and public sector entities. We would welcome increased funding of both public agencies and private chambers to support and enhance business connections and synergies. The Spanish government, for example, was involved in funding all manner of business chambers and educational and cultural outreach as an extension of its nationally coordinated business strategy.
Our third recommendation is to support bilateral and subregional trade agreements. For too long Canada has kept its eggs in the free trade of the Americas basket, even though there appears to be little chance that agreement will progress in the near or even distant future. We encourage the Canadian government to pursue bilateral and subregional trade agreements, as has the United States. Unfortunately, progress on several free trade agreements with Central America, the Andean countries, CARICOM, and the Dominican Republic has been stalled for a number of years.
Brazil came knocking two years ago to explore a free trade agreement with Canada. There are various interpretations of why their entreaty did not progress, but we suggest that the government redouble its efforts with Brazil and MERCOSUR in this respect.
We also believe that while NAFTA has been successful in bolstering trade and investment with Mexico, it has the potential to accomplish more. We support the efforts to deepen relations with Mexico through the expansion of NAFTA, and through the Security and Prosperity Partnership of North America, to improve regulatory coordination and cooperation.
Our fourth recommendation is support for foreign investment protection agreements. Canada still lacks foreign investment protection agreements, known as FIPAs, with a number of Latin American countries. We could encourage the government to pursue these as well. We at the CCA are appreciative of the support we receive from the federal government, and we would encourage the government to utilize the knowledge of our members to consult regarding these prospective agreements.
Our fifth and last recommendation is to take advantage of potential with Brazil. Brazil represents 50% of the GDP in South America. Canada is not exploiting the full potential for trade and investment with Brazil, in our opinion. EDC and BCCC have agreed to pursue a joint initiative called the Canada-Brazil Trade Pallet. The Canadian trade pallet initiative will seek to identify the key limitations to developing new business and managing existing trade flows with Brazil. It will also develop a means to deliver knowledge and services to enhance the bilateral economic relationship. This trade pallet would serve as a pilot project to provide information for a large government online trade services model, which could influence existing delivery models such as the virtual trade commissioner service. We hope to count on the government for its support for this important initiative.
In closing, Mr. Chair, the CCA and the BCCC member companies know that Canada must embrace the rapid changes that are taking place in global trade and investment flows. They must capture new markets and forge new partnerships if Canada is to continue to prosper.
Above all, Canada would stand to gain from political leadership at the top that prioritizes its relations in the hemisphere and sends a clear message that Canada has a strong political and economic stake in this hemisphere. The hemisphere wants more Canadian engagement. For a number of reasons, the circumstances are propitious for active re-engagement by Canada.
The committee's examination of these issues is timely. We look forward to the recommendations that emerge from your deliberations. Thank you.
