July 12, 2008

The FTA with Canada: Another attack on Sovereignty

Written by Colombian Action Network in Response to Free Trade (RECALCA),
Originally published in RECALCA, 18 June 2008
Translated by La Chiva

Bogotá - The Colombian government has closed Free Trade Agreement negotiations with Canada. These negotiations were extremely rapid, and unlike those with the United States, which lasted 16 rounds, were finalized in the fifth of six rounds initially planned at the outset of negotiations in July of 2007. Although the texts of the Agreement are unknown to the public, the texts of the Peru - Canada FTA are known; they are likely very similar to the Colombian agreement, as was the case with the US agreements with Peru and Colombia.

Also included are chapters and cooperation agreements on Labour and the Environment. These chapters and agreements further the many restrictions to workers’ rights and highlight the murders of trade unionists and other human rights violations that characterize Colombia. The Canadian government, an unconditional ally with Bush, has lent itself to signing this agreement in part as a way to facilitate the ratification of the FTA in the US Congress.

The rush to sign this Agreement shows that once the multitude of concessions are made to the US, this FTA will mean extending them to Canada. Proof of this is a report by the Colombian government, which indicates that to concretize Canada’s offer, in the last round “many sections were improved by offering parity with the agreement between Colombia and the United States.”

The government announced that the Canadian market will open up immediately for 98% of Colombia’s industrial exports, exports which are practically non-existent due to (among other things) the high cost of transport, since there are no direct [cargo] flights to Canada and cargo must pass for the US, where all merchandise must be unloaded and checked by customs.

The timeline for the full access of imports from Canada is set at 10 years, but effective immediately the majority of imports from Canada will be tariff free, which is to say that the government calculates that overnight, the emaciated and already under-protected agricultural and industrial sectors in Colombia will be capable of competing with their Canadian counterparts.

In this FTA, a cancellation clause and damages for the commercialization of goods and services have been negotiated, both of which are designed to protect Canadian investment and businesses in Colombia.

Since at least 1993, Colombia has had a trade deficit with Canada, which in 2007 reached $318 million concentrated in Colombian manufactured products such as textiles, footwear, plastic products, industrial metals, chemicals and paper as well as machinery and automotive equipment. Colombia’s imports from Canada last year reached $649 million, of which 57.2% were industrial products and 23.2% were agricultural, principally cereals and agro-industrial.

In contrast, Colombian exports to Canada reached $266 million last year, 90% of which consisted of coffee, coal, flowers, sugar and a handful of other agricultural products. The remaining 8% were basic industrial products.

Exports to Canada have a number of barriers, since there are specific sanitary requirements for seafood, plants, seeds, vegetables and fruit. These products must be inspected by the Canadian Food Inspection Agency. Goods from the textile and clothing industries require special permission for each importation, as do fowl and dairy products. Coffee is regulated through a series of quotas and fruit and vegetables through seasonal tariffs.

Canada has low tariffs and Colombian products are already favoured because of the Generalized Preference System, but textiles, footwear, clothing, steel and processed food are excluded.

Canada imposes a value added tax of 7% on all imported products, as well as charging federal taxes on consumer goods. Neither of these obstacles have been removed by the FTA, which means that the future of exports – which the Colombian government claims will benefit from the agreement – is not encouraging. Together, these factors demonstrate that the principal objective of this FTA are not commercial, because it means a further concentration of primary material exports, imports of machinery and industrial goods, and little competition.

The average tariff in Canada is 0.9%, and 90.6% of imports to Canada are tax-free; hence the reason that Colombia does not have better participation in the Canadian market is because of a lack of exportable products and of a competitive environment, because of the high costs of transport and sanitary and phyto-sanitary regulations. None of these obstacles were removed in this FTA.

Thus, the principle objective of this FTA is to attract investment. Canada is well known for outward foreign direct investment in mining and services and is a judicial paradise for mining companies due to its flexible legislation and the impossibility of regulating these companies. In addition, mining multinationals based in Canada take advantage of the resources of pension funds in order to strengthen their finances and compete in the global market. Canada’s main investments in Colombia are in oil and gas as well as telecommunications. These together make up close to $3.5 billion.

The reality is that the FTA with Canada is designed to guarantee the pillage of our natural resources, reinforce neo-liberal policies, and entrench Colombia in a permanent and unjust division of labour as a nation dependant on exports of primary materials. It will also worsen the labour, environmental and social conditions of the Colombian people.

It is necessary to denounce the government’s intention to guarantee, through the signing of Free Trade Agreements, the continuation of the neo-liberal policies that are already dragging Colombia into one of the worst crises in history.
RECALCA is a Colombian organization working against the FTAs. They can be reached at recalca [at] etb [dot] net [dot] co.

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