OTTAWA (CP) - As trade ministers continue negotiations for the FTAA, Canada is pushing ahead on its own to seek new trading partners that will help mitigate the pull of the mighty U.S. economy.
Negotiations for new bilateral trade deals with four Central American countries - Guatemala, El Salvador, Honduras and Nicaragua - are now underway, following the ratification of the first of such deals with Costa Rica, which came into effect Friday.
International Trade Minister Pierre Pettigrew said the "Central America Four" as the countries are known, bombarded him last week at the ministerial summit on the Free Trade Area of the Americas with requests to fast-track their negotiation process.
He added their enthusiasm contradicts recent reports the FTAA, due to be signed in 2005, may be stalled.
"(The reports) just (don't) reflect at all the reality," he said in a teleconference call from Quito, Ecuador, where the ministerial summit took place.
"There is progress in the hemisphere and an appetite for it."
The Costa Rican agreement sets the stage for the other small nations to follow, in hopes they too will benefit from a diversification of trade with the much larger Canadian market, said Costa Rican ambassador Carlos Miranda.
"It is the first time that a small economy signs a free trade agreement with a large economy," he said. "It's an experiment that opens the way for other people."
He added the deal, with unique side-agreements on labour and ecology, has built-in protections which could, one day, bring working and living standards in his country closer to North American levels.
"I think it will bring a lot of good to the people of Costa Rica. It will boost our economy a lot."
Honduran ambassador Ana Carolina Galeano said an agreement with Canada would be her country's preparation for full participation in the FTAA.
"It's our rehearsal for the trade agreement with the United States," she said. "It is related, but it's also separate, because we do see Canada as a very interesting market."
Peru, Bolivia, Ecuador and Colombia are also trying to establish their own bilateral agreements with Canada.
While at a glance these deals appear to hold much greater promise of market expansion and diversification for the smaller countries, they are also key steps in Canada's ongoing attempt to secure more trading partners.
For more than a year, Canada has been embroiled in an increasingly bitter battle with the U.S. over softwood lumber tariffs imposed on Canadian imports, a dispute which has pointed out some of the flaws in the NAFTA free trade agreement.
And, given that the FTAA still faces considerable hurdles, smaller bilateral deals may be the next best thing for reducing the stranglehold of the U.S. market, insiders say.
"There is a chance that all these little deals would get rolled into (the FTAA), but that's not for sure," said one government source who asked not to be named.
Ongoing instability in South America, including the collapse of the Argentinian economy last year, could pose serious challenges to the agreement, the source said.
The recent election of union boss Luiz Inacio Lula da Silva as Brazil's first left-leaning president has stirred more uncertainty in markets.
Brazil, which was always one of the most reticent players on the FTAA stage, could continue its protectionist stance or increase it under Silva.
"Clearly these are things that would need to get sorted out," the source said.
Pettigrew said all evidence so far indicates Silva is on board for the FTAA.
"His point of view resembles a great deal the view of Mr. (former president Fernando Henrique) Cardoso," he said.
"I'm confident Brazil will continue to play a useful role."
Negotiations with the Central American Four, which see the four countries reaching decisions with each other and then Canada, could lead to a draft agreement by March, Galeano said.
Canada's interest in the FTAA, which would establish a free trading zone throughout North and South America, has always surpassed that of the U.S., whose internal market is much larger and renders it less dependent on international commerce.
Canada's second-largest trading partner is the European Union; Mexico has now surpassed the United Kingdom as the third-largest trading partner, department officials said.
At the week-long meeting, ministers from the American nations ratified a joint ministerial declaration of 34 countries. They also agreed to publish the negotiating texts, which Pettigrew called a victory for freedom of information and transparency in the negotiating process.
"The momentum of the negotiation has been quite strong since Quebec City," he said. "We've met all of the dates and objectives that we had fixed for the last year and a half between Buenos Aires and now."
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