It is a pleasure for me to be here today and to speak to you about the Pacific Alliance. The Pacific Alliance is a dynamic group of Latin American countries that together represent the ninth-largest economy in the world. It is in Canada's interests to pursue an enhanced relationship with this group, as I will explain. However, before I speak about the Pacific Alliance, I think it would be useful to situate our interest in developing a deeper relationship with this group in the context of Canada's broader goals in the region.
Prime Minister Harper has made it a foreign policy priority to strengthen our engagement with the Americas in matters of trade, investment, security, and development throughout the hemisphere. Our vision since 2007 has been one of a more prosperous, secure, and democratic hemisphere. Seven years on, our whole-of-government engagement in the hemisphere has never been stronger.
Canada's strategy for engagement in the Americas is delivering results for Canada and for the hemisphere on three pillars: pillar one, increasing economic opportunity; pillar two, strengthening security and institutions; and pillar three, fostering lasting relationships. These three pillars are interrelated, as I will explain, including in the context of the Pacific Alliance.
The first pillar is increasing prosperity.
Latin America and the Caribbean is an economically dynamic and politically stable region. The sustained economic growth it has experienced in the past decade and the growing middle class across the region offer significant opportunities for Canadian businesses and investors.
Canada's efforts to liberalize trade and promote investment with countries of the Americas are working—many barriers to trade and investment have come down and trade flows are growing.
To date, Canada has concluded free trade agreements with Mexico, Chile, Colombia, Peru, Panama, Costa Rica and Honduras, more such agreements than with any other region in the world.
We have also put into place nine foreign investment protection agreements, 28 air transport agreements, five MOUs on trade and investment, and two science and technology arrangements.
Total two-way trade between Canada and the region, including Mexico, increased 32.1% from 2007 to 2012, and there are over 3,500 Canadian companies active in the region. In some countries, we are also the largest source of foreign investment, which contributes to economic opportunity in both Canada and the host country.
Second is strengthening security and institutions. We know that opportunity, jobs, and growth require peace and stability. For one example, the activities of organized criminal networks, including the illicit drug trade and associated violence in some countries in the Americas, threaten security and good governance and make it difficult to maintain an environment where trade and investment can flourish.
To assist these countries, since 2008 Canada has invested over $2 billion Canadian through international assistance, multilateral contributions, and security-focused programming to improve security and strengthen governance in Latin America and the Caribbean, so that our partners can uphold freedom, democracy, human rights, and the rule of law.
We have placed special emphasis on programs in Central America, a key transit region for drug trafficking northward. For example, the Prime Minister announced a new $25-million security cooperation program for this region last year at the Summit of the Americas in Cartagena. In Colombia, Canadian funding has also helped to clear mines and explosive remnants of war from acres of land, thus allowing it to become arable land used productively. These are just examples of ways in which security underscores and buttresses our economic interests as well.
Security is improving. This is creating an environment where individuals and businesses are better able to prosper and grow.
The third pillar is fostering lasting relationships.
Relationships across government, the private sector, civil society and people-to-people ties are fundamental to achieving long-term results. Canada needs to be engaged in the region in order to better identify and pursue shared goals and values. We have extensive linkages in education, tourism and migration, through large diaspora communities from the region now resident in Canada. Over 4 million Canadians visit Latin America and the Caribbean every year.
Canada is committed to remaining a strong partner as the region continues to grow and innovate. This means solidifying our existing relations, looking for new opportunities to deepen our relations with key partners in the region. In order to build effective partnerships to tackle issues across the region and to find mutually beneficial trade and investment opportunities, we need to know and understand each other. And to do this, we need to work together. This is an important reason why Canada needs to engage with the Pacific Alliance.
Now I will turn to Canada's relationship with the Pacific Alliance. Conceived in 2011, the Pacific Alliance was formed by Chile, Colombia, Peru, and Mexico, as you know, to create an area of deep integration by promoting the free movement of goods, services, capital, and people. These four countries are strong proponents of economic openness and fiscal responsibility, and have already established a network of free trade agreements among themselves. They are among Canada's most like-minded partners in the region. They are also a regional economic powerhouse. The four Pacific Alliance countries together have a combined population of 207 million, and account for 49% of Latin America's exports, and 34% of its GDP.
As I said at the outset, with a GDP of $1.9 trillion Canadian in 2011, if the Pacific Alliance were counted as a single country, it would represent the ninth-largest economy in the world. This is just slightly larger than Canada's GDP of $1.76 trillion in the same year. By 2020, according to some estimates, the Pacific Alliance's GDP could reach $3.6 trillion, equivalent to Germany's current GDP. Total merchandise trade among the countries of the Pacific Alliance and the world amounted to $1 trillion Canadian in 2011, compared to Canada's total trade of $893.9 billion. This is 46% more than the global trade of South America's principle trading bloc, Mercosur, in the same year. Between 2000 and 2011, the bilateral trade of the Pacific Alliance countries with the world has averaged an annual growth rate of 8.8%, whereas Canada's was 5.2%.
This kind of growth is leading to changes, not only in relationships inside the region, but also in the relationship between the region and others. The Trans-Pacific Partnership is a case in point, where countries are coming together—three of the Pacific Alliance countries are members of the TPP—across the Pacific to build a new trading alliance that better responds to the new global environment, and Canada must continue to be part of these changing dynamics.
The Pacific Alliance countries recognize this. By working together to protect and advance their interests, they're building relationships for the long term. For Canada, this group of countries represents an economic motor in the region, with the potential for deeper trade and investment relations over the long term. Canada's total merchandise trade with the Pacific Alliance members more than doubled, from roughly $16 billion Canadian in 2000, to nearly $40 billion Canadian in 2012. The Pacific Alliance countries accounted for more than two-thirds of Canada's two-way trade with the whole Latin American region.
The countries of the Pacific Alliance remain one of the largest destinations for Canadian direct investment in Latin America, accounting for nearly two-thirds of Canadian direct investment in the region. In 2011, Canadian direct investment in the countries of the Pacific Alliance totalled $25.7 billion. Individually, Canada's bilateral relations with the members of the Pacific Alliance are some of our strongest in the hemisphere. We have free trade agreements and extensive investment with all four members.
Since NAFTA took effect in 1994, Canada-Mexico merchandise trade has grown almost sevenfold, surpassing $30 billion Canadian in 2012. We are now among each other's largest trade and investment partners, and have developed a comprehensive relationship that encompasses a wide range of bilateral, trilateral, regional, and global issues.
Canada-Chile bilateral merchandise trade has more than tripled since the CCFTA came into force in 1997, reaching Canadian $2.5 billion in 2012. Canada was the largest source of new direct investment in Chile over the last decade.
On Colombia, our FTA with Colombia came into force in August 2011. Colombia is now Canada's second-largest merchandise export destination within the Pacific Alliance region. Two-way merchandise trade in 2012 reached Canadian $1.5 billion.
Trade relations with Peru have also seen substantial growth since the implementation of our FTA in 2009. Two-way merchandise trade totalled more than $4.2 billion in 2012, which is a 49% increase over pre-FTA levels in 2008. By 2011, Canadian investment in Peru was $7.7 billion, an increase of more than 100% over pre-FTA levels. Canadian interests in Peru are focused in the extractive and financial sectors but there is some diversification going on as well.
I give you these statistics to provide clear evidence that Canada already has strong economic relations with the Pacific Alliance countries. But as they bind us closer together, it is in Canada's interests to deepen our relationship with them, as a group, in the context of our engagement in the Americas and also with a view to our trans-Pacific interests.
This alliance is showing leadership in the region, promoting good governance and open markets. Their efforts to break down the barriers between them have the potential to create opportunity and prosperity in the hemisphere at large as well as across the Pacific.
Since its inception in April 2011, Canada has been following this positive and fast-moving initiative very closely.
