Canadian Leader Heads Trade Drive to Latin America

January 11, 1998 - 0:0
OTTAWA-- Canadian Prime Minister Jean Chretien was to leave here Saturday with a powerful trade delegation hoping to turn a new page in Canada's relations with Latin America. Accompanied by all 10 provincial premiers, the leaders of the nation's two arctic territories and more than 400 business leaders, Chretien will swoop down as leader of "team Canada" on Mexico, Brazil, Argentina and Chile. Following Canada's "Year of Asia Pacific" in 1997, Chretien's advisers are suggesting that 1998 may well be this country's "Year of Latin America." But first, Chretien must resolve at least two simmering disputes which could have long-term negative effects.

In Mexico, there is a dispute over a contract to modernize Mexico City's subway system. The contract was awarded to a consortium led by the Canadian conglomerate bombardier. But the Mexican government cancelled the project and re-opened the bidding. In Brazil, bombardier stands accused of breaking an accord -- with aeronautics firm embraer -- to buy aircraft for a military training program being managed by bombardier in Saskatchewan. Bombardier denies ever having made a firm commitment.

And although the Ottawa insists this is just a commercial dispute between two companies, Brasilia is threatening to scuttle Canadian hopes to sign a cooperation agreement with Mercosur, the South American common market embracing Argentina, Brazil, Paraguay and Uruguay. The message Chretien hopes to send on his January 10-23 sweep of the four nations is directed as much at the United States as to Latin America. The final stop of his four-country swing will be Chile, which was supposed to become the fourth member after the United States, Canada and Mexico of the North American Free Trade Agreement (NAFTA).

But faced with the inability of the administration of U.S. President Bill Clinton to get the necessary "fast track" authority from Congress to negotiate Chile's accession to NAFTA, Ottawa has negotiated a bilateral trade pact with Santiago. And it is no secret that Ottawa is prepared to negotiate similar deals with other Latin American nations -- even without U.S. participation. Officials in Chretien's office have hinted that this month's "Team Canada" swing will be just the start of a year-long concentration on developing relations with Latin America and the Caribbean. There is already a planned Caribbean-Canada summit, tentatively scheduled for March, and other "Team Canada" missions to Latin America are in the pipeline, according to Canadian officials.

So far, the "Team Canada" approach has been restricted to Asia with each trade mission resulting in contracts worth billions of dollars. In Latin America, according to the senior officials, the emphasis will be on contracts totalling "tens of millions, maybe hundreds of millions." This month's "Team Canada" will be the largest in terms of business leaders; most of the participants are small and medium-sized enterprises in the telecommunications, mining and energy sectors -- areas in Latin America considered ripe for "Canadian expertise." Canadian officials, speaking on background, suggested that many of the contracts to be signed during the four-nation Latin American swing will be joint ventures with Canadian firms providing management and research to Latin American natural resources and telecommunications corporations.