6. Trade in Services and Investment

The CCFTA was erected upon the template of a modern free trade agreement of the North American Free Trade Agreement (NAFTA) that covered trade in goods, and services, as well as the bilateral investment relationship. The CCFTA includes measures to liberalize trade in services with special provisions for telecommunications. However, financial services and mutual recognition of professional services designations and credentials are excluded from the original agreement.

Statistics for bilateral trade in services are extremely limited; therefore, it is hard to draw clear conclusions about the effect of services liberalization under the CCFTA based on the limited information.  

Statistical analysis shows that bilateral trade in services between Canada and Chile following the implementation of the CCFTA trended modestly upward (See Figure 12). Total trade in services increased from $171 million in 1997 to $225 million in 2010. Of this amount, total Canadian service exports to Chile increased to $137 million in 2010 from $117 million in 1997 (an increase of 17 percent), while imports from Chile went up from $54 million to $88 million over the same period, which is equivalent to an increase of 63 percent. In 2010, Canada had a trade surplus with Chile in services by an amount of $49 million. Chile was the third-most important market in South America for Canadian services exports after Brazil and Colombia, and the third- most important source of imports in services after Brazil and Argentina. 

Figure 12: Canada’s and Chile’s Exports of Services, 1993-2010, $ Million

See the following figure 12 text alternative for description.

Figure 12 Text Alternative
YearChile's exports to canadaCanada exports to Chile
19932344
19942448
199556133
19964189
199754117
19982865
19993658
20006468
20015172
200286173
20036683
200472107
200566108
20066783
200762101
200881119
2009178132
201088137

Source: Statistics Canada

Canadian service exports to Chile have been consistently dominated by commercial services that include many knowledge-based computer, engineering and business services. Exports of travel and transportation services to Chile picked up over the period, but the increases were not enough to challenge the dominant position of commercial services. Canadian service imports from Chile were also led by travel and commercial services. There were signs of increased importing activities in transportation services from Chile.

Table 17: Bilateral Trade in Services between Canada and Chile, 1995-2010, $ Million

1995199720002001200520062007200820092010
Total exports133117687210883101119132137
Travel14101213202120202226
Commercial services106984650674262779289
Transportation and government services13999212020221822
Total imports565464516667628117888
Travel18353325252525252525
Commercial services19418151720112612229
Transportation and government services19151311252326313134

Source: Statistics Canada

Chile already had a robust foreign direct investment regime prior to the implementation of the CCFTA. The investment provisions contained in the CCFTA, which are along the lines of a standard foreign investment treaty, further enhance Chile’s investment regime. Therefore, the agreement provides Canadian investors with greater confidence and certainty, which has a positive impact on Canadian direct investment flows into the Chilean economy. 

Statistics for Canadian direct investment in Chile show a clear and convincing upward trend since the implementation of the CCFTA in 1997. The stock of Canadian direct investment in Chile grew four fold, up from $3.3 billion before the CCFTA 1997 to $12 billion in 2011, making Chile the ninth-most important destination for Canadian outward investment and the most important destination in South America. Similarly, according to Chile’s official source of information, total materialized Canadian direct investment in Chile amounted to US$ 14.8 billion for the period between 1974 and 2011, accounting for 18.1 percent of total materialized foreign direct investment in Chile, making Canada the third largest investor in the country after the U.S. and Spain Footnote 18.  

Figure 13: Canadian Foreign Direct Investment in Chile, 1995-2011, $ Million

See the following figure 13 text alternative for description.

Figure 13 Text Alternative
YearFDI
19953,281
19963,876
19974,878
19985,049
19995,421
20006,144
20016,639
20026,024
20035,636
20045,330
20054,626
20067,067
200710,856
200813,263
200912,037
201011,361
201113,726

Source: Statistic Canada CANSIM database table 376-0036, Mar 2012