Canada - Central America FTA
As noted earlier (TPM, No. 10, April 00), the prospect of a bilateral FTA with Costa Rica alone did not seem credible unless the strategic purpose was to embrace all of Central America in due course.
During a visit to Guatemala City September 28, the Canadian Prime Minister confirmed that negotiations would commence soon to develop a regional free trade agreement that includes Guatemala, Honduras, Nicaragua, and El Salvador.
It is starting to become somewhat clear that one aspect of Canada's strategic purpose is related to Canadian investment in the mining sector, which is present in almost all Central American countries.
Today, Canadian junior and senior mining companies listed on Canadian stock exchanges hold interests in roughly 3,300 international mining projects. Close to 300 mining companies are listed on the TSE (20% of listed companies) with a market capitalization of $80 billion - a 21% increase over 1998 - and total trading value of approximately $65 billion. From a political perspective, it is noteworthy that there are over 650 mining and exploration companies, suppliers, consulting firms, and services providers in the Toronto area alone.
According to a 1997 report of the Canadian Intergovernmental Working Group on the Mineral Industry, the number of properties held in Latin America by companies of all sizes listed on Canadian stock exchanges surpassed, for the first time, the number held in the United States in 1996. At the end of 1996, there were at least 260 Canadian mining companies active in South America, 120 in Mexico, and 90 in Central America and the Caribbean.
These companies held more than 850 properties in South America, 280 in Mexico, and 140 in Central America and the Caribbean. They held about 140 in each of Chile, Peru and Venezuela, more than 120 in Argentina, and more than 50 in each of Brazil, Bolivia, Ecuador and Guyana.
In 1998, Canada remained the largest player in the exploration market south of the U.S. border. At that time there were 495 large Canadian mining companies running 1,300 projects in Mexico, Central America, South America and the Caribbean. This is clearly a growth industry.
Canadian-based companies active in Central America on exploration and development projects include: Placer Dome in Costa Rica, Greenstone Resources Ltd. in Honduras, Triton Mining Corp., and Black Hawk Mining in Nicaragua, as well as Teck Corporation in Panama.
Based on government estimates, Canadian firms have direct investment in Central America amounting to C$604 million, with more than two-thirds in Costa Rica. Mining sector investment appears to account for half of the total, and valued at about C$340 million.
This suggests priority Canadian negotiating intent may exist in respect to professional and business services (including licensing and accreditation of engineers), temporary entry, tariffs on mining machinery and equipment, competition policy, and investment measures.
ISSN 1492-7187, TRADE POLICY MONITOR, October 2000,
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