Ladies and gentlemen -- Good Evening, Bonsoir, Buenas Noches and Boa Noite.

Thank you to the Haskayne School of Business and the Canadian Council for the Americas-Alberta for this speaking invitation.

Trying to cover business opportunities in Latin America is a little like being asked how to do business in all of North America.  It’s a huge topic and each of the countries in Latin America is unique.

Differences aside, three key developments are making trade and investment in many parts of Latin America hard—or foolhardy-- to resist anymore:

Many Latin American countries are more stable, growing faster and ranked higher for ease of doing business than ever before in their history. And the growth rates, this year and next, of key markets, like Brazil, Panama, Mexico and Peru, are forecast to do much better than the U.S. or Canada’s.

Canadian exports and direct investment in many key parts of Latin America have increased steadily over the past decade--except for a blip in recessionary 2009.  Compared to five years ago, for instance, Canada’s exports to the region as a whole jumped 25 per cent.

Latin America has several concrete trade advantages over emerging giants like China and India. We have 5 free trade agreements with key Latin American countries, either in force or near completion, eliminating burdensome tariffs and making direct investment more secure.  The region’s relative proximity also gives exporters delivery speed and cost savings.

Today, I’ll focus on 5 key Latin American markets, where EDC has seen the biggest boom in bilateral trade:  Brazil, Mexico, Chile, the Andean Region, and key markets in Central America and the Caribbean.

EDC’s experience in these markets serves as a good reflection of what Canadian exporters and investors are doing in general.

EDC – Overview and Role in Latin America 

• If you want further proof, take a look at Canadian exports and investments at large:
• They reached record highs in Latin America in 2008--before the effects of the credit crunch hit most markets-- and have picked up encouragingly in 2010.
• Canadian merchandise exports rose 20 per cent between 2009 and 2010, to some $11 billion.
• These exports are especially strong in mining, oil and gas, infrastructure and resource sectors.
• By 2008, most Canadian direct investment in emerging markets--more than 40 per cent--went to Latin America; and their value more than doubled since 2003, to nearly US$ 40 billion.

Investment advisors too are bullish about Latin America:

According to a Santander Global Banking survey of 750 top investment managers, more than half will increase investments in Latin America this year, compared to about 15 per cent in Asia.

Brazil is the favourite market, followed by Mexico, Peru, Argentina & Colombia.

And the World Bank Ease of Doing Business Index ranks Mexico, Peru & Colombia as the Top 3 countries in Latin America; the index is a composite rating of the ease or complexity of such factors as starting up a business, getting permits, paying taxes and enforcing contracts.

Economic Environment

Is anything changing in the coming year?

Before looking at some of the region’s top markets, I’ll touch on the broad economic landscape--fresh from our Chief Economist’s latest Global Export Forecast.

Growth in many of the hottest Latin American markets is expected to moderate this year.  It should still be well-above industrialized markets and a little higher than the world average—which is forecast to exceed 4 per cent.

The strongest growth will continue to be in Peru, Panama, Chile, Argentina and Brazil, with Mexico close behind.  These results will be supported by strong domestic consumer demand and high commodity prices.

On the more challenging side, many governments, in even the best markets of the region, still put up stumbling blocks in the form of highly bureaucratic or weak institutions, tie-ups between federal, provincial and municipal bodies, complex tax structures and layers of regulations.

Many Latin American countries recognize they will need to strengthen their state institutions and mechanisms to address these concerns by investors and local communities alike.  The timeline for such changes is of course harder to predict.

Development projects are also coming under greater public scrutiny in all countries.

Today too, the majority of reputable lenders increasingly require that project sponsors not only mitigate the environmental risks of major projects, but also engage with the community, to respect social and human rights.  This requires the joint efforts of the company, community and local government—to monitor and apply commitments that are made.

Key Regions and Sectors of Opportunity

Now, let’s take a whirlwind tour of the key regions and sectors of opportunity, starting with Brazil.

Given that Brazil is hosting the 2014 FIFA World Cup and 2016 Olympics, beyond the potential tourist boom, it means massive construction in the run up to the games.

And it’s not just sports venues—but all the roads, mass transit, ports, public buildings and power grids that need to support the influx of people and show their pride.

Estimates are as high as $1 trillion for both government and private spending over the next four years. And that doesn’t even include oil and gas, mining and other resource investment!

Many of the capital goods and specialized services for these industries simply cannot be sourced from within Brazil and represent some of the best opportunities for Canadians.

For those interested in these opportunities, there is a DFAIT mission to Brazil on June 11th  - more information can be found on their website.

Still, Brazil is not without its challenges–including expensive tax frameworks, strong local and foreign competition, and requirements to partner with a local firm or to hire locally.

The right market advice can make all the difference—and you can get it from Canada’s trade commissioners in Brazil and EDC’s representatives in Sao Paulo and Rio de Janeiro.

They can also help connect you to creditworthy buyers and potential local business partners, reputable agents and legal experts to navigate the maze of regulations.

Most of Canada’s world-leading engineering-consulting firms already have a strong presence in Brazil. For example, SNC-Lavalin alone has more than 2,000 employees there.

These connections provide opportunities for other Canadian firms to enter their supply chains, with niche equipment or services.

That’s how one of our Calgary clients, Born Canada, makers of direct-fired heaters, first entered world markets back in the late ’80s.  They started filling contracts for big Canadian engineering firms doing business overseas. Today they’re around the world and starting to tap into the supply chain of Brazil’s oil & gas giant Petrobras.  We’re told it took lots of back-and-forth negotiations, but now the business is opening up.

Talking about Petrobras, EDC helped finance their growth to encourage them to use Canadian suppliers and partners.

We’ve pulled the process along by setting up matchmaking meetings between their key decision makers and more than 200 Canadian companies –at least 150 from Western Canada.  60-plus companies are doing business with them now.

By the way, we call this our pull strategy.  We’ve taken a similar approach with Brazil’s mining leader Vale and other corporations seeking Canadian expertise.

The result: EDC’s loans and insurance volume, facilitating Canadian trade in Brazil, doubled since 2006—to nearly $3 billion; it’s now our largest market, by volume, after China.

Mexico is next on our quick tour:

Mexico is recognized as a competitive and relatively close manufacturing base for foreign companies looking to save costs.

Two of the country’s chief attributes, our clients have told us, are its well-educated labour force and well-equipped industrial facilities for rent—what they call corporate shelters.

We estimate about 2,000 Canadian companies have set up affiliates in Mexico to date.

EDC too has a relatively large customer base exporting or investing there--more than 700 companies in 2010, benefiting from nearly $2.5 billion worth of our loans and insurance.

In volume, that’s more than double our previous year’s activity.

Key sectors for our clients include extractive, transportation, infrastructure, and ICT.

As in Brazil, we help finance strategic companies, like Pemex in Oil & Gas, Industrias Penoles in mining, and CFE, Mexico’s electricity company, to encourage Canadian procurement.

Our representatives in Mexico City and Monterrey also lead matchmaking efforts, bringing these companies and ours together, to strengthen existing business and build future ties.

On the risk side, Mexico was relatively hard hit by the credit crunch and is just climbing back to pre-crisis growth levels—but its banking sector is stable and foreign investment is growing.

Some regions must be avoided owing to violence related to drug-trafficking, and our market experts can steer you in the right direction—literally.

Zipping down to Chile…

This is the second largest market in Latin America for Canadian direct investment.

And Canada ranked as the largest foreign investor in Chile in 2010--mostly in the mining sector.

In 2006, EDC started to introduce Canadian companies to Chilean copper giant CODELCO.

What’s interesting is that this was the first foreign corporation we financed to encourage purchases from Canadian suppliers; Since then, they have bought nearly $1 billion worth of goods & services from more than 150 Canadian firms.

As I mentioned before, this “pull strategy” has now connected many more Latin American companies with like-minded Canadian firms in nearly all key sectors.

Overall, EDC’s support to Canadian companies in Chile nearly quadrupled over the past decade, with the help of our representative in Santiago. He also serves the Argentinean market.

Let’s back up again, this time to Central America & the Caribbean…

This region covers some 34 markets, where EDC’s total volume reached $2.7 billion in 2010.

I’ll just touch on three markets that have shown the biggest jump in trade with Canada.

Trinidad &Tobago is one of the largest economies in the Caribbean, thanks to its energy sector.  It’s a good candidate for our Western Canadian expertise to help develop its oil reserves.

It has also allocated about a third of its budget to rebuilding roads, bridges and its water supply network.

Overall, Canadian exports to the country shot up 70 per cent between 2005 and 2010.

Our exports to the Dominican Republic have also grown steadily since 2005, as much as 50 per cent before the global downturn.

Today this trade is being revived by opportunities in infrastructure and the environment, and demand for agricultural products, pharmaceuticals, textiles and other consumer goods.

Canada ranks third in foreign direct investment stock in the country, after the U.S. and Spain.

In mining, Canada’s Barrick Gold and Goldcorp are undertaking the largest project in the country’s history, offering supply chain opportunities there too.

Another great pick for Canadian trade is Panama.

Speak to Canadians doing business there and virtually everyone is passionate about the region.

Some of the pluses include a well-trained workforce, business that’s conducted in US dollars and the largest free trade zone in the world after Hong Kong.

The $5-billion-plus expansion of the Panama Canal is also leading to billions more in other infrastructure improvements.

If you are willing to go farther south, to the Andean region, Peru and Colombia are the best bets.

Peru is now ranked first in South America for ease of doing business; Colombia is second.

The Canada-Peru Free Trade Agreement has been in full swing since 2009, eliminating tariffs on 95 per cent of Canadian exports.

Canada is already the main investor in Peru’s mining sector, and, today, the infrastructure sector is helping lead the country’s growth. Demand is also up for industrial equipment, consumer goods and water treatment technologies.

In Colombia, opportunities abound in the oil and gas sector—20 out of the 28 foreign Oil & Gas companies in Colombia are Canadian!

For example, early this year Ecopetrol and Talisman Energy completed the purchase of BP in Colombia, creating a new joint venture.

Colombia also seeks investment in infrastructure to improve its highways, ports, airports, water and waste management services, and more.

The Canada-Colombia Free Trade Agreement should be ratified this year, which could give some of our goods an edge over U.S. exports.

Fears generated from years of drug-related violence in Colombia are also subsiding – the country has vastly improved its domestic security since 2002, including large-scale demobilization of guerilla forces.

Companies in the extractive sector, in particular, still have to take security seriously, know which areas to avoid and beware of extortion by some private security services.

EDC’s representative in Lima and Canadian Trade Commissioners in the region are both helpful sources of information about market conditions, laws and security issues in the Andean region.

Conclusion

To sum up, from what EDC is seeing and supporting, many parts of Latin America offer more and better opportunities for Canadians today than in their entire history.

Nowadays too, more companies recognize they need to diversify their customer base—the U.S. financial crisis gave many firms enough of a scare to actually start doing something about it!

We see our clients increasingly importing, exporting and investing in Latin America to create more cost-effective operations—or global supply chains.  EDC calls this integrative trade.

Indeed, Latin America has become the most popular emerging-market region for Canadian participation in this integrative trade—whether by investing in projects or joint ventures, setting up a service office, importing lower-cost supplies or exporting finished products.

EDC helps you do so in three key ways:

• EDC provides loans to Canadian firms setting up facilities or joint ventures abroad, and insurance and guarantees for their foreign affiliates. 
• EDC extends loans to foreign companies and projects in key emerging markets to encourage them to purchase from Canadian firms.  And our foreign representatives help you connect with each other and complete the transactions that may arise.
• EDC has extensive expertise in global supply chain management and is developing new financial solutions to help products move through the supply chain.

EDC also increasingly partners with other banks and insurers to expand the credit and coverage available to Canadian companies trading abroad—whether in Latin America or the rest of the world.

For a wealth of information on countries, buyers supported through our pull strategy, or upcoming events, visit our website – edc.ca. You can also find contact information for our in-market or domestic representatives there.

Finally, long-term commitments and patience are key when doing business in Latin America, as I’m sure many of you are aware:
Investing your time comes well before before investing a lot of money.

We know many customers who spent months, sometimes years, making regular visits to a particular market…plying information from our EDC experts…getting to understand the regulatory requirements and culture…hiring a distributing agent first.. and handling one-off deals before their business took off…

But then…wow did it grow!  Yours can too!

Thank you, merci, muchas gracias, muito obrigada!