I would say the graphs would be the most important thing, if one were to glance at it quickly, so I'll be referring to the graphs when I speak. The body of the text can be reviewed later.
With regard to the context for the agreement, we've been engaging in the process of trade diversification in this country, which is extremely important for Canada. The agreements we've signed have been an important step in accomplishing that.
Also at FOCAL we've recently engaged in some research on Jeff Rubin's thesis about the impact of the rise of oil prices on competitiveness. Working with the UN Economic Commission for Latin America and the Caribbean, we've essentially looked at what this sphere of rising oil prices means for the trade competitiveness of countries in Latin America versus countries in Asia. In essence, the research has proven Mr. Rubin's thesis, that rising oil prices will diminish the importance of globalization and increase the importance of regionalism. We'll be importing fewer goods from Asia and more goods from within this hemisphere. So getting ahead on treaties like Panama is fundamentally and crucially important for us as this new era of regionalism returns.
Another point about the agreement is that Panama, as has been mentioned, is a growing hub for services and finances in addition to trade. It's becoming, in essence, a Singapore or the Hong Kong of the hemisphere. This is a place where you're going to want a base business. This is a place where you're going to want to be deeply integrated if you're going to be doing more business in the hemisphere. In that regard, that is another reason the Panamanian agreement is important.
It's interesting. Last week, or the week before, in Ottawa we had Roger Noriega, former assistant secretary of state for western hemisphere affairs at the State Department. We asked him, given his insights about the change in Congress, what the trade agenda looked like and what he thought about Canada's work on the free trade agreements. He mentioned that they were worried about the Panamanian agreement because of what they had seen with the Colombian agreement. In essence, we had him here at Parliament, and at a speech in town he said that the U.S. stands to lose $2 billion worth of trade to Canada. And Panama is going to be more of the same.
It's actually kind of enjoyable to hear him say this, considering that Roger was the one, when he was a committee staffer in the Senate, who wrote Helms-Burton. So to have him back up here and to see him squirm about Canadian trade was quite enjoyable.
But let me offer another quote, from the U.S. Wheat Associates and the National Association of Wheat Growers in the United States. This is a statement from the U.S. Wheat Associates president and the National Association of Wheat Growers chief executive officer:
The Canadian parliament has ratified a bilateral free trade agreement...with Colombia that will, when implemented, allow Canadian wheat to enter that country duty free.
The agreement gives a major wheat-producing competitor an immediate price advantage in a market where U.S. wheat exports had earned a dominant market share. It means that U.S. wheat producers could lose sales worth $70 million today to Canada at a time when they can least afford it. In fact, U.S. farm families now face losing a substantial portion of agricultural exports to Colombia worth nearly $1.7 billion, including $330 million in wheat exports [alone].
In talking about Panama, we see more of the same. If you look at the brief, we've identified areas where Canada and the United States compete. And on the side of U.S. exports you can see several examples of places where we do very well in the region but where we currently do not do so well in Panama. There are opportunities there, and these are extremely important for us.
I would also note that the EU is working on an agreement with Panama. They signed one with Colombia.
Against the United States we have a price advantage based on tariffs. Against the EU we have an advantage based on distance and shipping costs. The advantage against the EU will increase and will be permanent. The one against the U.S. is temporary. So the importance of taking this window of opportunity while we have it is crucial.
As far as we can tell, we're looking at about four years until the U.S. gets its act together on the trade front.
If you remember, the Costa Rica and Chile agreements were passed, and there were lame-duck presidents after mid-term elections. We're probably looking at a similar scenario as the one time when the U.S. will be able to again look at movement on the free trade agenda.
Let me close with two notes.
The first is on Panama. It's a stable country that's well regarded and considered to be well governed. In the political risk reports, the human rights reports, or any sort of metric you want to look at for the country, it does fairly well. It's a good partner. It's a type of country with whom we want to do business, a country that is serious about trade.
These negotiations moved at record speed. I can't recall seeing another set of negotiations move so quickly. The Panamanians are serious partners, and they will remain serious partners as issues come up. They've proven this in their negotiations with us to this point. That's an important point.
But secondly, let me make a larger point about the trade agenda. We have a window where we enjoy an advantage vis-à-vis the United States, Panama, Colombia, and Peru. We've signed agreements up and down the Pacific coast. This is an agenda that will carry us through the near term. It's also an opportunity to think about the longer term. Where do we go from here with the free trade agenda?
The advantage with the U.S. is that it will be four years or so until the Americans come back in. We have a unique opportunity to look at the next big thing in trade. These are the trans-Pacific arrangements, the attempts to create a free trade agreement linking the countries that ring the Pacific.
There are three such agreements under way. Each one is stalled. The Asians have one, the Latin Americans have the Arco del Pacífico, and the Americans have the trans-Pacific partnership. The Americans are stalled for obvious reasons, given the Congress. The Latin American one is stalled temporarily because of intransigence on the part of Nicaragua and Ecuador. But believe me, the Latin Americans are looking to regroup and refocus. The Americans eventually will get their act together with this larger treaty.
But with each of the initiatives under way, we've been left out and marginalized on the sidelines. When these agreements start up again, we cannot afford to be left out again. Our moves in Colombia, in Peru, and in Panama have positioned us better than the Americans to take leadership and to move in this area.
When you think about the success of this agreement, you're looking at the largest trading block on the globe. You're looking at companies seeking to base firms in the new world, the Asian companies seeking to base themselves on this side of the ocean. Where are they going to base themselves? These are the types of jobs that we want to bring to this country.
McKinsey has done a report and some work on trade with Asia and the importance for Canada of going after this. If you look at transshipments, if you look at air travel, these are all areas where we really should have a distinct advantage. Our strength is that we are neither Asia nor Latin America. It's also our weakness. Only by taking advantage of these agreements, looking at a longer-term agenda, and making the types of investments we need in this country's institutional architecture can we be prepared for that.
With Panama, it's a great deal. It should be a no-brainer for this committee. But the question is really, where do we go next? How do we build upon success?
Thank you.