When politicians, business people and lawyers speak of "Latin America", invariably the furthest this will ever extend is to the USA or its immediate southern neighbour. This question regarding "Where does Latin America start and end?" is not unlike the questions that arise when the concepts such as "Europe" and "Asia" are considered and defined. Though mapmakers and those looking at the issue from a purely geographic perspective may have reason to draw the line below the 49th parallel, hopefully those with a more pragmatic and forward-thinking perspective will consider all parts of the Western Hemisphere to be part of this conversation.
For consideration and debate, I offer the following five reasons to include Canada in the mix when considering future legal, political and business issues in Latin America:
- Substantial Foreign Direct Investment: Successive Canadian federal and provincial governments have been supportive of the efforts by Canadian businesses to pursue an active policy of trade and investment liberalization in the Americas. While this trend became most visible with the signing in 1994 of the North American Free Trade Agreement, the incidents of actual investment between Canada and the other countries in the hemisphere is long-standing and extensive. While significant investments in Canada which have gained greater public profile are principally those in the financial services, mining, petroleum and manufacturing sectors within the past decade, there have actually been various Canadian based multinationals which have had a presence since the earlier 1900s. While the precise statistics are varied, Canada's economy is oriented towards FDI, with the total amounts of Canadian investments abroad consistently exceeding the G7 averages. Given the continued robustness of Canada's economy as compared to other peers, the trend of increased Canadian FDI is almost certain to continue.
- Developed Banking Sector Which Is Expanding: One of the obvious lessons from the 2008-09 economic crisis is the importance of having an appropriately structured and regulated financial regime. While the inherently conservative and cautious nature of Canada's financial system was the cause for much criticism prior to the crisis, the continued strength of Canada's financial system is one of the foundations upon which Canada has continued to weather the storms of uncertainty in the last few years. Consistent with the strength of the financial and insurance sectors in Canada, the sectoral focus for Canadian FDI has been weighted quite strongly to finance and banking. So those looking to invest into or from Canada have a sound financial platform to support them.
- Stable Political and Business Climate: One of the hallmarks of Canada's approach both to inbound and outward investment has been a measured and progressive approach to attracting foreign investors to Canada and encouraging exports around the world. As part of this government-supported initiative, the current Conservative government led by Prime Minister Stephen Harper has followed through with its Strategy of Engagement in the Americas. While the exact features of this program in terms of implementation is, to put it mildly, a "work in progress", with the recent election resulting in his government being in a majority position, Prime Minister Harper has showed a renewed energy towards international initiatives, and this seems to have been bearing fruit within 2011-2012. With the continued economic challenges in the United States appearing to be more than just a cursory phenomenon, there is a recognition both that Canadians have options outside of the U.S. market, and that these need to be explored. So even though the U.S. market and the Canada-U.S. relationship will always remain primary in terms of its importance, there is a general recognition of the importance with dealing with other relationships.
- A Long Record of Inclusiveness and Multiculturalism: The repeated questioning around "What is Canadian?" has been described by some as Canada's national obsession. Rather than progressing by way of the U.S. melting pot, Canada has developed, in part by way of significant government support, a notion of multiculturalism which embraces cultures from around the world. While this is not an automatic recipe for financial and political success, it does provide a more welcoming platform for inward investment and a generally more accommodating perspective for Canadian FDI. Canada's record of leadership on various issues, including social programs, health care and education may well also offer models in other circumstances. This is particularly the case when Canada is still a very young country – a nation created in 1867 is in fact much younger than many of other countries in the Western Hemisphere – which suggests a willingness to be flexible about policy positions and approaches.
- Strong Established Relationships, Products/Services and
Market Participants: Canada's relationships with
virtually all of the countries in the rest of the hemisphere are
widespread. While the patterns have varied over the years,
substantial bilateral trade exists with Mexico, Brazil, Peru,
Chile, Cuba, and Venezuela. And the relationships with Commonwealth
countries in the Caribbean has been significant for a number of
years. Though the absolute numbers have fluctuated, Canadian
companies are operating in the region across a products and
services, including banking, mining, energy and natural resources,
agriculture, transportation and manufacturing. And with this
activity, there is also an encouraging trend of other countries
being active in and investing in Canada, with a notable example
being Brazil's Vale (mining).
The connections between Canada and the Caribbean and Latin America have been increasing dramatically in recent years. As a result, while the United States will no doubt continue to be the dominant economic and trading partner for most other countries in the region, Canada will hopefully serve as valuable contributor in the years to come.
Article appeared in the September 2012 IBA Latin American Forum News
The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.
© Copyright 2012 McMillan LLP