Export Natural resources and services key markets N.B. firms should tap into

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REBECCA PENTY
Telegraph-Journal

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Latin and South American countries are promising emerging markets that New Brunswick companies should pursue, the Atlantic Provinces Economic Council reports.

The Halifax-based think-tank listed Brazil, Peru, Chile, Colombia, Argentina, Venezuela, Panama, Costa Rica, Trinidad and Tobago, Cuba, the Bahamas and Barbados as prime markets for companies based in the Maritimes in a new trade report.

"They're very commodity-driven, some of these countries, so they've got lots of mining and oil development," council senior economist David Chaundy said Wednesday.

Atlantic Canada's existing trade with the Americas is focused on energy products, newsprint, potash and food products, the report said.

Chaundy said companies offering environmental, engineering, construction, education and training and information technology services could also do well in the region's developing nations.

Despite the growing promise of India and China as markets, Chaundy said the proximity of countries in the Americas and existing trade relationships are points in their favour.

"They're closer geographically than Asia - China, India and other countries - so where distance is an issue in terms of business travel or shipping products, that gives the Americas an advantage," Chaundy said.

He warned that companies moving to trade with the Americas should expect to invest time and resources on trade trips and overcoming language barriers more common in Spanish- and Portuguese-speaking South America than in the English-speaking Caribbean.

"The key thing here is that we did caution that this is not for firms who are not exporters or who are very small," Chaundy said.

The numbers according to Export Development Canada show Canadian companies have already started moving towards Latin and South America over traditional U.S. markets, which have historically dominated trade.

From 2002 to 2007, exports of goods from Canada to the United States rose only five per cent, compared to a 92 per cent increase in exports to South America and 52 per cent increase to the Caribbean.

The development bank's senior economist Geoff Stone, who specializes in trade with the Caribbean, said New Brunswick companies should work on breaking into nations where governments have committed to attaining developed-country status, citing Trinidad and Tobago as an example.

"There's a lot of government spending that is going on as that country tries to reach developed status by 2020," Stone said.

Trinidad and Tobago is looking to diversify its economy, Stone said, which means government may be looking for higher technology companies to move in.

Stone warned that while the United States has been hit the worst by the global economic downturn so far, countries in Latin and South America that previously benefitted from liquidity in the market, foreign direct investment and consumer spending on travel will still suffer economic woes.

"2009 could be a rough year for some of these economies," Stone said, adding that the payoff in trade with Latin and South America will be in the long term.

"When we look past the crunch, their GDPs, their imports, their emerging middle class, tends to grow faster than the developed world," Stone said.

Brazil, which is among the world's fastest growing alongside Russia, China and India, should be at the forefront of plans among New Brunswick companies that can offer resource development services, said Preet Aulakh, the Pierre Lassonde chairman in international business at York University's Schulich School of Business.

"All of these countries have been really hungry for resources, in terms of mining and natural resources," Aulakh said.

He warned that exporters might face more frequent fluctuations in currency among Latin and South American countries.