Santiago Times | 1 Oct 2013
Chile and Canada upgrade FTA to include financial services
By Henry Clayton Wickham ([email protected])
Changes to Chile’s free trade agreement with Canada will give its financial institutions privileged access to Canadian investment, and vice versa.
Chilean and Canadian officials announced the expansion of their existing free trade agreement (FTA) Monday. Among other changes, the agreement now includes a chapter which extends free trade rights to the financial services sector.
Under the new chapter, Canadian financial service providers will stand on a level playing field with those of other Chilean economic partners like the U.S., who have preferential access to Chilean investment. Chilean financial institutions will enjoy the same level of privilege in Canada.
"This chapter sent a clear signal, again, to Canadians that Chile is open to business and is a great place to do business," Canadian Minister of International Trade Ed Fast said in interview with the Canada news show Land and O’Leary Exchange. "For those on the ground ... it locks in the commitment both sides have made in terms of an open environment in which financial institutions can do business."
In a statement, the Chilean Foreign Affairs Ministry called Canada a "key partner for Chile" and cited the impressive rise in trade between the two nations since first signing an FTA in 1997.
The new financial services chapter in the Chile-Canada FTA reflects changes in the economic environments of both nations since that initial agreement. In the last 20 years, Chile’s middle class has grown significantly, causing a corresponding increase in the demand for financial services such as loans, insurance and credit cards.
For Canada, the FTA upgrade is part of larger effort on the part of Prime Minister Stephen Harper’s government to ease its economic dependence on the U.S. It also reflects the growing importance of the financial services sector for the Canadian economy.
"Financial services account for half of Canada’s total stock of outward foreign direct investment," Janet Ecker, president and CEO of the Toronto Financial Services Alliance (TFSA), told CNW Group." And not only are the sector’s levels of foreign trade and investment high, they are also growing, outpacing the average for all sectors."
Along with freeing up the financial services sector, the revisions announced on Monday ensure that Canadian exporters and service providers will have the same opportunities as Chile’s other free trade partners when it comes to procuring government contracts. The changes also included new rules about dispute settlement and customs procedures.
Since Chile and Canada’s initial FTA in 1997, Canadian investment in Chile has more than tripled — growing from about US$4.6 billion in 1977 to almost US$15.8 billion in 2012 — and, according to the Chilean Foreign Affairs Ministry, Canada is Chile’s third-most important source of foreign investment. In the last 15 years, Chilean exports to Canada have increased an average of 17 percent annually and, in 2012, two-way commercial trade between the two nations exceeded US$2.3 billion.
This updated trade agreement forms part of the Chilean government’s continued efforts toward global economic integration. The country already has the most free trade agreements of any in the world, and, along with three other countries, launched the Pacific Alliance in 2012, an agreement to which Canada is an observing member, pending its government’s acceptance of full status. Chile was also an original signatory of the controversial Trans-Pacific Partnership (TPP) — of which Canada is a negotiating member — which is still in the process of development, having reached its 19th round of talks at the end of August.