Exports like mushrooms and manufactured electronics parts destined to Canada from Colombia have marked a strong impact on the two countries economies, as the free trade agreement they share reached two years on Thursday.
Minister of Commerce, Industry and Tourism Sergio Díaz-Granados told financial newspaper Dinero that Colombia has registered some 124 products for export since August 2011. Most of Colombia’s exports, roughly 54% to Canada come from the manufacturing sector.
The Minister explained that total exports have fallen 20% in terms of sales due to a steep drop in the price of coffee and coal – two main exports to the Canadian market.
But even though sales have fallen, the number of products across agriculture, industrials and textile manufacturing signal a more diversified portfolio of exports. And diversification is what Colombia’s Finance Minister, Mauricio Cardenas has set as one of Colombia’s primary goals for 2013.
Diversification became important, according to the Finance Minister, after a record flood of foreign direct investment in the country’s oil and mining sectors stirred worry over the threat of Dutch Disease eating away Colombia’s relatively small manufacturing sector.
On the other side of the agreement, Canada has poured money into Colombia’s economy over the past decade. In 2012 foreign direct investment to Colombia soared to $212 million from just $18.5 million in 2006.
Pacific Rubiales, a Toronto-based energy company that operates in Colombia, represents one of Canada’s greatest business interests in the country.
Whether the free trade agreement Colombia has kept with Canada for the last two years will continue to diversify the economy away from what the IMF has warned could be over dependence on oil and mining, is a question of time, patience and peace.
An end to the armed conflict between FARC rebels and the Government, currently being hashed out in Havana, Cuba, will likely bring more security to a still insecure energy sector. This year rebels kidnapped Canadian company employees on a site in the North of Colombia.
Colombia’s Commerce Minister, however, is confident in the way the agreement has worked out so far: there is diversification. Without a doubt, he says, with this free trade agreement the agriculture sector has been a net winner.
And “in infrastructure,” he adds, “[The Canadians] are evaluating projects for the long term.”