Free Trade has been hotly debated in Canada since the first Canada-United States agreement. As you read the following information, think about why international trade is not just an economic issue.

A few short weeks after General Pinochet stepped down as Commander-in-Chief, Chile was in the news again, this time as the host to a 34-nation conference on a proposed hemispheric free-trade zone. Prime Minister Chrétien represented Canada at this meeting, which laid the groundwork for a massive free-trade area to include almost every country in the Americas by the year 2005. For Canada, Chile has been a key partner in promoting this plan. Chrétien’s 1998 “Team Canada” trade mission to Latin America made a special stop in Chile for meetings with President Eduardo Frei and top business leaders. Canada has even jumped ahead of the United States in signing a provisional free-trade agreement with that country. The U.S. Congress’s refusal to authorize President Clinton to “fast track” trade talks with Chile and other South American nations gave Canada a negotiating edge that Chrétien was quick to seize.

Chile is an attractive potential trading partner for Canada. Its economy is growing at an impressive rate—seven per cent annually for the past 14 consecutive years. Chile’s exports, especially fresh fruits and vegetables, are in great demand in Canada, especially during our winters, which correspond to the growing season in the Southern Hemisphere. In turn, Chile is eager to buy Canadian products such as wheat and manufactured goods. In addition, Canadian firms have been very active investors in the Chilean economy, especially in the mining sector. According to Canada’s ambassador there, Lawrence Leatherman, Canada is the second-largest investor of capital in that country, to the tune of about $4.8-billion, most of it in mining.

Bruce Turner is a mining engineer who has helped to develop the huge Canadian-operated copper mine called La Escondida in the arid Atacama desert. According to him, Chile’s overall receptiveness to foreign investment is high, despite some bureaucratic red tape and the requirement that companies post surety deposits before they begin to operate in the country. He also notes that Canadian and other foreign firms are frequently expected to provide health, education, and other social services for the workers they employ and their families. This is because such programs were systematically gutted during the years of the Pinochet dictatorship and are only now being reintroduced in Chile.

Besides heavy investments in mining, Canadian firms have also played a role in Chile’s developing fishing industry, especially in the salmon fishery. In recent years, Canada’s trade with Chile has tripled, and a $50-million deficit has now been turned into a $100-million surplus. This means that Canada is now selling more to Chile than it purchases from that country, largely because of increasing wheat sales. According to Gustavo Indart, a professor of Economics at the University of Chile, this growing economic relationship between the two countries is mutually beneficial. He thinks that if the hemispheric free-trade agreement becomes a reality, then the Canada-Chile connection will have played a large part in bringing it about.

However, there are vocal groups of concerned citizens in both Chile and Canada who are pressuring their respective governments to pay more attention to the social and economic hardship many Chileans continue to confront. If increased trade and investment will help to improve their living conditions, enhance human rights, grant more recognition to trade unions, safeguard the environment from degradation, and promote greater equality for women, then it will be welcomed. But if the growth of large blocs of nations where trade and investment flow freely across borders means only that a minority of privileged people become rich, while the vast majority remains poor, or even becomes poorer, then the benefits of such a development must be questioned. In this way, the Canada-Chile trade connection can be seen as one example of the phenomenon of globalization that is linking the countries of the world into a single economic network. Whether this will result in a brave new world of universal prosperity or a widening gap between the globe’s rich and poor people remains a topic of considerable debate.

Discussion
1. Why are political and business leaders in both Canada and Chile so eager to increase trade and investment between the two countries?

2. Do you think that globalization is something we should welcome or be concerned about? Explain your answer.