Canada’s trade volumes will increase with Chile through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

CPTPP creates trade opportunities for Canada

The benefits of the CPTPP have been overshadowed as of late amidst the USMCA negotiations. The agreement was signed on March 8th, 2018 and is expected to be ratified in the near future. The U.S. is not currently a part of CPTPP, which will create some major trade opportunities for Canada as we compete in similar export markets (EDC, 2018).

Although there has been a lot of attention on Canada and its trade growth potential with Japan, Chile is an important emerging economy which should not be overlooked. Chile ranks number one in South America with an estimated GDP per capita of $24,500, according to the CIA World Factbook. The CPTPP provides a unique investment opportunity for Canadian exporters and entrepreneurs looking to expand in the South American market.

Trade between Canada and Chile

Trade between Canada and Chile is already significant and has steadily increased since 1997, when the Canada-Chile FTA was enacted. According to the Government of Canada, bilateral trade between the two nations in 2017 equated to $2.9 billion. Chile is Canada’s third-largest trading partner in South and Central America. As trade volumes and relationships are already strong with Canada and Chile, the CPTPP will set the stage for future growth.

A desirable prospect of the CPTPP for Canada and Chile is that either country can select a trade agreement of their choice, whichever has more favourable provisions. The CPTPP will also promote better labour and environmental standards, as well as increased labour mobility for higher-skilled professions.

In terms of foreign direct investment (FDI), the CPTPP will allow Canadian and Chilean companies to invest with greater confidence. According to the Government of Canada, the CPTPP will provide protection from unfair and discriminatory treatment, allowing greater predictability and transparency.

When we consider the factors of endowment, Canada has a comparative advantage with arable land. As a result, our main exports to Chile has been agricultural; fats, oils, and wheat which we can export at a low opportunity cost. Due to the reverse weather seasons (northern vs. southern hemisphere), Canada imports a large number of fruits from Chile, a total of $605 million in 2017 (Government of Canada, 2018).

The Conference Board of Canada suggests that financial, computer and managerial services are three of Canada’s top five growing exports in general. Canada has been a large exporter of commercial services to Chile with a total of $161 million in 2017 (Government of Canada, 2018).

Canada’s top import from Chile are metals and minerals for a total of $922 million (Government of Canada, 2018). Mining is one of the backbones of Chile’s economy, a similar trait to Canada. Stronger trade relations pose an opportunity for Canadian mining companies, such as Toronto-based Barrick Gold, to expand their operations in Chile and the surrounding areas. Canadian mining companies could focus on joint ventures with Chilean companies, reducing costs and increasing project scalability.

Economic trade growth could also lead to increased tourism between Canada and Chile. Air Canada already offers daily direct flights from Toronto to Santiago. Both nations offer many sights for outdoor, wine and ski enthusiasts. The reverse weather seasons and stronger trade relations could help foster increased tourism between the two nations.

CPTPP to foster trade growth with Chile

Canada must acknowledge that the CPTPP will also come with increased competition among the eleven countries that form the multilateral agreement. With increased trade, economies of scale can be established. Comparative advantages would help countries export goods and services which come at a low opportunity cost, ultimately driving down the cost and putting additional pressure on domestic producers.

All indications suggest that the CPTPP will facilitate further trade growth between Canada and Chile. This agreement will allow Canada to better leverage an already strong trading relationship with Chile, an important emerging economy.

The CPTPP will also provide more favourable trading conditions in terms of FDI, labour mobility and protection from unfair and discriminatory treatment. There are unique opportunities for both countries in terms of increased tourism, joint-ventures for mining operations and to establish economies of scale through comparative advantage.

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The number one lesson for all exporters is that South America is varied, and that understanding those variations is critical.

One of those variations is dividing the continent into two clear blocks: those economies that are open and keen to trade with the world, and those that aren’t as keen.

Trade protectionism in Atlantic South America

Let’s start with the latter. Brazil and Argentina, the two largest Mercosur partners, are spending a lot of energy making it rather hard for many imports to cross their borders. The idea behind this is to protect local industries from foreign competition to give them time to develop and grow.

I can see this working for some sectors if planned correctly, but South America has a strong record of failure with similar industrial policies. Also, I’ve heard Argentine industry leaders complaining that they can’t even import raw materials or spare parts to produce locally, and that they just can’t satisfy local and regional demand, even if other products are prevented from entering the market.

Whatever our opinions as economists on the effectiveness of these policies, as exporters you need to know that they exist and are unlikely to be reverted soon.

Argentina has become one of the most protectionist countries in the world, with tariffs that often shock the World Trade Organization (WTO) and that have resulted in many lawsuits. Tariffs aren’t the only barriers. The Argentine government is rather creative and constantly comes up with non-tariff barriers as well, such as slow and complex import licenses and quotas.

Brazil might not be as bad, but it’s on the same wavelength. Uruguay and Paraguay tend to follow suit as part of Mercosur agreements, even begrudgingly.  We’re close to national elections here in Uruguay, a country with people and businesses keen to trade with the world, and our allegiance to Mercosur is being questioned. There is also discussion about how to connect more closely with Chile and the Pacific Alliance. So that’s the Atlantic for you.

Pacific South America is open for trade

Now, let’s move over to the Pacific. The picture couldn’t be more different. Chile, for example, has free trade agreements with almost every country on Earth. Mexico (not in South but in North America), is the only other Latin American country that comes close. So they have understandably worked together in the Pacific Alliance, a trade block often compared to Mercosur, but one that has accomplished so much more over a very short period.

So, leaving Mexico and going back to South America, let’s remember that Peru and Colombia (also on the Pacific) are Pacific Alliance members with Mexico and Chile—two countries that have grown considerably in the last five years. Defying all expectations and becoming models for the region and the world, they have also favoured free trade policies.

Protectionism or open trade for long-term growth and development?

We could argue forever over which South American international trade policies are best for economic growth and long-term development.

What’s also important to know is that these divisions aren’t just economic, but also political, so things get tricky.

And remember that trade unions are very powerful across South America, particularly in Argentina and Brazil.

Whatever we think about each arrangement politically and economically, it’s clear that one of the strongest trade divides in South America is a protectionist East (Atlantic) versus an open West (Pacific). Make sure you understand these variations, since they can be critical to pricing and logistics, for example.

Also, make sure you understand the synergies within and across blocks when choosing and developing export markets in the region. And that’s without mentioning countries like Bolivia, Ecuador and Venezuela… Maybe next time.

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My road to becoming a Certified International Trade Professional (CITP) began with a single FITTskills course I took back in 1999 at the International Trade Centre Toronto. At the time I was working as an assistant trade commissioner for ProChile Toronto and the trade commissioner and I decided to take the course together in order to equip ourselves with international trade tools that might be beneficial in fostering trade ties between Canada and Chile.

Foray into international trade training

The course was a great overview of the industry, and it highlighted some of the key issues Chilean exporters were facing while trying to enter the Canadian market; issues I was dealing with on a daily basis.  I was able to assist the exporters in navigating through some of the complexities of choosing the right market entry option, logistics and distribution strategy and, in general, risk mitigation.

With fluency in Spanish and a degree in commerce and economics, I continued working in the field of export promotion for 10 years. I then made the decision to leave my field and work in a family business for a couple of years. Two years turned to six years, and the desire to get back to what I was passionate about became overwhelming.

Getting back in the game

Unfortunately, a six year hiatus from my profession had left my confidence shaken. Was I up to date on international trade issues? Was my skillset where it needed to be to re-enter the global business field? Although I had the international trade experience, I was in essence starting over and I needed to carve out a niche as an international trade practitioner. I needed to upgrade my skills, not only to enhance my chances of finding an international business position but also for my own professional development.

I decided to finish the remaining seven FITTskills courses online through eConcordia.

With two kids in competitive sports, work commitments and a busy lifestyle in general, the online courses gave me convenience and flexibility to complete the course work on my own time.

Although I missed the in-class social interaction with other professionals, the course discussion boards did provide a certain level of interaction between fellow students and the instructor.

I felt that the curriculum provided a new level of competency in multiple aspects of international trade.  Some courses were a refresher for me, while others courses delved deeper into areas that I had only touched upon in my previous work experience.

The payoff

In 2011, I obtained my CITP designation and I was proud to be receiving it along with other highly skilled international trade professionals. Shortly thereafter, I accepted the position of export manager at Intellimeter Canada Inc., a manufacturer based in Pickering, Ontario.

The company was looking to take a strategic approach to global market expansion, so I used what I learned via the FITT curriculum to leverage my experience as an international business development specialist and hit the floor running.

I started up and headed the international business development division of the company. One of my first tasks was the creation of an international business plan with a focus on risk mitigation; which was not as monumental a task thanks to the FITTskills courses I had completed.

Due to my knowledge of and belief in FITTskills development, I created an internship position for a FITTskills grad from the International Business Management Graduate Certificate Program at Durham College. I had the pleasure of mentoring this student, who is now a full-time employee at Intellimeter Canada Inc. and is working towards the required hours for his own CITP designation.

What it means to be a CITP

In a nutshell, I believe the CITP designation stands as a symbol of competency and credibility in global business. It displays a thorough grasp of international trade processes, as well as a dedication to ethical business practices and ongoing professional development. And it is reassuring to know that many of my colleagues in global business share the same competencies and values.

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As a first-timer to Chile, I have to say what I like most about the country is the people. I just love their Latin American personalities, which tend to be professional and respectful, but also warm, open and full of life!

I arrived in Santiago in the afternoon on November 4^th and was greeting with sunny 30 degrees Celsius weather. By the evening the temperature had dropped to about 15 degrees, but this was still warmer than what I’d left behind in Ottawa.

FITTskills developments in Colombia and Chile
Our FITTskills program is already being taught at the Universidad Sergio Arboleda in Bogotá, Colombia. And by this spring, our courses will start being delivered in an evening-class format to professionals in both the private and public business sectors in Santiago, Chile at the Universidad de Chile.

The University is one of the oldest and most prestigious in the country. Nearly 40,000 students attend the five different satellite campuses and several experimental stations situated across the country. The plan is to eventually expand the evening program and incorporate FITTskills into the school’s current full-time international business master’s program.

Down to business in Santiago
On the morning of the 5^th, I met up with Carlos Ronderos for breakfast. Carlos is a partner at Ronderos y Cardenas S.A.S., the Colombian consulting firm we’ve teamed up with to help deliver our FITTskills program in South America.

Carlos is very committed to getting our FITT training into the region. His company has been assisting us by translating our FITT program-material into Spanish as well as by helping us make some invaluable local connections.

After breakfast Carlos and I headed over to the World Trade Center Santiago. We met with the General Manager Matías Pérez and his colleagues Francisco Gutierrez A. and Jéssica Baio Freire. It was great to hear that they’re very interested in FITTskills, and that they support the Universidad de Chile with their delivery plans for the program.

We then visited the University, where I had the pleasure of meeting Olga Lucia Lozano F. and Doris Lopez Giral in person for the first time. I’ve exchanged emails with both of these ladies as they’ve worked to spearhead the implementation of FITTskills at the University. Doris works as a professor, and is very keen to start incorporating more practical and usable skills and knowledge development into the University’s programs. This is where her interest in FITT and the FITTskills program comes in.

We ended the day at the Canadian embassy in Santiago, where we met trade commissioners Peter Furesz, Brenda Wills and Evelyne Coulombe. We updated them on FITT’s activities and plans in Chile, as well what we’re currently doing in Colombia.

There’s a lot of interest from the embassy with respect to doing speaking engagements at the Universidad de Chile once the FITTskills courses start being offered.

It will be our pleasure to keep the embassy in-the-know going forward so that we can foster connections between the embassy and the international trade program at the University.

International trade training at the Universidad de Chile

On Wednesday, the University set up a mini-conference for me. I had the opportunity to speak to individuals from the public and private business sectors in Chile, as well as some of the school’s faculty members, about FITT’s international trade competencies. I discussed what these competencies are, why they’re so important for individuals working in global business, and our latest integrative trade competencies developed through the research we finalized this year as part of our International Trade Workforce Strategy.

There was a lot of interest from the audience, and I was able to answer some great questions about the competencies and our training program.

After the conference, we had time to chat more with University faculty with respect to how they can start delivering the FITTskills program. We had a couple of suggestions whereby R&C in Colombia will send several of their instructors to the University to deliver training, but also to provide train-the-trainer sessions for local instructors. This will enable us to familiarize local instructors with the FITT material as well as our teaching methodologies.

Later in the day, a colleague of Carlos invited us to have a special lunch with several individuals from the Banco de Chile. I met with Christian Schiessler, Director, and Francisco Garces G., who sits on the board. Both were interested to hear about our current activities in the country, and were very supportive of our plans for the future.

Looking ahead to more FITT activity in Latin America
It was certainly a whirlwind two-day trip, but I’m pleased to have had the opportunity to visit Chile. I’m looking forward to building on our relationships with our new FITTskills delivery partner and contacts, and I’m excited to continue expanding the FITTskills program in Latin America!

Have questions about FITTskills in Latin America or have comments about the Colombian or Chilean markets? Leave them for me below!

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