It will be my pleasure.
Mr. Chair and the committee, during the past 35 years, I've taken several companies into the global market, setting up strategic distribution, sales, and investment programs for companies moving into the region. I've had the chance to work with governments in different Latin American countries including heads of state, ministers, and institutions in both public and private sectors.
I'd like to present a few points that I believe have importance in the structure of the Pacific Alliance and in accordance with the proposed objectives. An understanding of the culture and the modus operandi of doing business in the region are paramount in ensuring the development of a successful strategic medium- and long-term trade program with its alliance partners.
A knowledge of current foreign and domestic debt in alliance countries' financial and fiscal policies, investment incentives, and even corruption issues such the recent Odebrecht scandal, which had a paralyzing effect on major development projects in the region, is of paramount importance to both Canadian investors and exporters.
Identification of alliance countries' political history, legislation, and current objectives, and disposition to pass protectionist laws all must be considered when deciding on strategies for expansion into these regions for the export of products and services and investment. The potential benefits are clear.
With a population of 220 million, the Pacific Alliance market represents a major economic opportunity for Canada. Canadian companies that receive payment principally in U.S. currency can capitalize on Forex transactions that generate additional profit. Close market proximity is also an important factor. When entering Pacific Alliance countries, many Canadian export companies may still face lengthy and expensive challenges such as product registration and acceptance processes. This can prevent small and medium-sized Canadian companies from capitalizing exports when trying to penetrate Alliance countries.
Elimination of additional import duties and tariffs is another significant step that will allow Canadian goods and services to be more competitive, as well as the use of free zones in Pacific Alliance countries for manufacturing. A major obstacle to competitiveness in this market is freight costs for goods and services.
For Canadian companies investing in alliance countries, preferential treatment such as tax holidays and the elimination of import duties for capex and opex expenditures is of the utmost importance in allowing them to be competitive and profitable. Canada is a dominant player in the clean tech industry, which is often very cost-competitive, and where the provision of products and services can include global and environmental conditions.
PDF, EDC, and other organizations have been hosting inbound and outbound tech trade missions with very significant results. The Paris agreement is forcing Pacific Alliance countries to make their legislation more environmentally friendly. Cypher Environmental is a clear example. Our company offers cost-competitive and environmentally friendly road construction and waste-water treatment technologies in the alliance market.
Alliance governments' assets are being substantially tied up in collateralizing their long-term loans with the IMF, World Bank, EIB, and others. The long-term political and economic risk needs to be fully understood when structuring the Pacific Alliance agreement. The agreement should also focus on how the alliance will help partners and countries to be more significant international trade partners.
Owners globally have been undertaking major roles in investment and development in the alliance countries during the past few decades—principally investments in mining and oil and gas assets, major infrastructure construction projects, the acquisition and construction of major ports and airports, and the financing of the expanded Panama Canal. All are indicators of potential long-term threats to the stability of the alliance agreement.
Continued major investments by private corporations or government-led finance investments by other major foreign stakeholders in the alliance region will in the long-term create significant trade pressure points for renegotiation, which in fact should be considered and dealt with today.
Expressions of geopolitical unity such as the proposed expansion of alliance members to countries such as Costa Rica, Panama, and perhaps Ecuador are vital in creating a unified and solid economic trade bloc. Consider the failed attempt by the Grupo de ALBA countries of South America. Alliance countries should also be given a preferred status in bidding on major infrastructure projects. The securing of long-term food supply chains for Canada from alliance countries should also be a priority as land worldwide becomes less fertile and water shortages become common.
One of our country's greatest contributions to the development of foreign trade and investment has been the excellent work performed by our trade commissioner services, EDC, and CCC, which have been instrumental in assisting companies to successfully identify and capitalize on potential opportunities in the Pacific Alliance countries.
Finally, I look forward to any questions you might have.