Canadian companies looking to expanding their businesses should consider the opportunities available to them through strengthening Canada-Latin America relations. This means they ought to think about the commercial and bilateral trade and opportunities and agreements granted by the developing relationships between Canada and key Latin American markets.
Canada-Latin America trade relations have been interlocked for many years and continue to promote and support each other in economic, social and political endeavours. Free Trade Agreements (FTAs) have allowed the globalized north and south to strengthen their access to each other’s markets abroad and important benefits.
BizLatin Hub provides an extensive comprehension of commercial and trade relations between Canada and Latin America. Continue reading to understand further about how BizLatin Hub can help your business expand into Canada or Latin America.
The core of Canada-Latin America trade and commercial relations
The foundations for trade and commercial relations between Canada and Latin America were laid down for hundreds of years. However, these relations intensified when the North America Free Trade Agreement was signed in 1992 and then later came into force in 1994. The North American Free Trade Agreement (NAFTA) links Canada’s economy to the rest of the Americas like never before.
NAFTA is defined as a free-trade region between the United States, Latin America, and Canada. The establishment of NAFTA has enabled Canada to sign trade agreements with nations across the region, such as:
- Canada- Chile Free Trade Agreement enforced from July 1997
- Canada-Costa Rica Free Trade Agreement (CCRFTA),
- Canada-Argentina Foreign Investment Promotion and Protection Agreement.
These agreements have allowed Canadian businesses to rapidly expand across Latin America.
Benefits of relations between Canada and Latin America
The nature of Canada-Latin America relations has seen many benefits over the last few years. These include positives such as:
- Improved political Canada-Latin America relations.
- Opportunities for new and emerging companies.
- Strong established exchange of goods and services.
- Stable business climate.
- Easy access too competitive and expanding markets.
- Sustainable direct foreign investment.
These opportunities have only increased over time and will continue to expand at a swift pace.
Canada-Latin America free-trade agreements supporting trade
Canada-Chile Free Trade Agreement
Chile and Canada have been expanding their trade and commercial relations for many years. In July 1997 Canada and Chile entered into a free trade agreement (CCFTA). This had a positive effect and as a direct result. Bilateral merchandising trade has increased by almost fourfold since the CCFTA came into force, expanding to almost $2.9 billion in 2017.
By the end of 2017, the stock of Canadian investment in Chile was $17.1 billion, making Chile the top direct investment destination in South and Central America. Furthermore, Canada and Chile have consistently kept up to date with their agreements. Some of these smaller changes have included tariffs phase-put periods in the years 1999,2001, and 2004, as well as the applicable rules of origins for products.
On February 5th, 2019 this agreement was modernized. This modernization represented a historic achievement for Canada, as it was the first time a Canadian free trade agreement included a stand-alone agreement on both trade and gender, making a truly historical moment. Likewise, this agreement strengthened Canada-Latin America relations.
Canada-Colombia Free Trade Agreement
More recently, direct trade agreements between Latin American countries and Canada have facilitated more business opportunities for emerging economies and companies.
These improving Canada-Latin America relations include trade agreements such as the Canada-Colombia Free Trade Agreement (CCoFTA). This agreement has been in force since August 2011 and makes it Colombia’s second free trade agreement with a developed country. This agreement has meant that 98% of the tariffs in goods and services have been eliminated successfully. Additionally, it ensures equitable treatment for Canadian and Colombian investments in each country.
As a direct result of this, bilateral trade grew by over 50% since the enforcement of the agreement. According to the Trade Commissioner Service of Canada, this growth is 10 times greater than Canada’s two-way trade with the rest of the world. Moreover, this agreement has paved the way for Colombia to become the 5th largest recipient of Canadian investment in Latin America and the Caribbean which has only strengthened trade and commercial relations.
Opportunities as a result of Canada-Colombia relations
One of the more recent examples of emerging markets filled with opportunities is Cannabis. Cannabis has had a recent spike in its trend. The introduction of Canada’s “Cannabis Act” in 2018 has created one of the most exciting opportunities between Canada and Latin America in one of the region’s most prominent markets: Colombia.
Whilst Colombia is a pioneering cannabis hotspot in Latin America, it is also in an advantageous position for global domination in this industry, as the 2018 “Cannabis Act” has meant new opportunities for Colombia. The country aims to be the global leader in the production of cannabis and is most certainly not far off from achieving this. Colombia is already set to supply 44% of the global demand for cannabis this year.
This new Canadian legislation has opened many doors for foreign businesses looking to invest in Colombia as well as the medical cannabis industry. This opportunity would not be as successful if Canada-Latin America relations were not as strong or had such successful trading and commercial relationships and agreements.
Take advantage of Canada-Latin America relations with expert guidance and support
It is vital to comply with local rules and regulations to ensure that you and your business have the best success in both Latin America and Canada. At Biz Latin Hub, our team of legal and financial professionals offer a comprehensive strategic breakdown of market entry and back-office solutions to support your successful integration and establishment within Latin America.
We’re equipped with a depth of knowledge of Canada-Latin America relations, trade and commercial regulations. We offer specialist guidance to ensure your business operates in full compliance with its obligations. Contact our team at Biz Latin Hub for more information and personalized assistance.
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