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Latin America - a Market for Canadian Forest Products

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Latin America - a Market for Canadian Forest Products LATIN AMERICA - A MARKET FOR CANADIAN FOREST PRODUCTS POTENTIAL AND PROSPECTS FOR DEVELOPMENT by ALFONSO CASASEMPERE Ingeniero Forestal, Universidad de Chile, 1967 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF FORESTRY in the Faculty of Forestry We accept this thesis as conforming to the required standard UNIVERSITY OF BRITISH COLUMBIA April, 1970 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarship purposes may be granted by the Head of my De• partment or by his representative. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Faculty of Forestry The University of British Columbia Vancouver, Canada Dates April, 1970. i ABSTRACT The Latin American market for forest products is eva• luated with emphasis on the economic, social, and political aspects influencing demand and trade. Canada's political, cultural and commercial relation• ships with Latin America are investigated and it is concluded that, currently, among the most important factors restricting a possible increase in trade with the area ares Canadian detachment from the Inter-American System and political iso• lation; reduced commerce with all countries south of the United States? trade patterns imposed by economic growth and by bilateral cooperation? and economic integration among the countries of the region. Trends indicate that as Latin America increases its financial wealth and income is distributed along more equit• able lines, demand for industrial forest products will rise considerably. Estimates of demand for 1965, 1975 and 1985 are given. Emphasis is placed in distinguishing between six types of forest products? sawnwood? plywood and veneer? particle board? and wood pulp and paper. Identical treatment is given to the presentation of future estimates of production and net regional deficits. Net deficits in forest products 3 are anticipated to be, by 1975? 50 thousand m of plywood 3 and veneer? 150 thousand m of particle board? 400 thousand m3 of fibre board? 192 thousand tons of pulp? and 1.279 million tons of newsprint. The sawnwood sector is expected to supply all domestic demand and hopefully export to other regions of the world. Future import requirements are evaluated under the assumption that all regional producers will sell their pro• duction in Latin America, therefore, the trade deficits forecast are minimal. If, however, any producing country sells forest products outside the area, net deficits are expected to increase. Because Chile is the only net exporter of industrial forest products in Latin America, its future capacity for production is evaluated. Considerable, and in some cases total, competition to Canadian forest products in Latin America should be expected from Chilean exports. The Latin American Free Trade Association agreements are the key to the marketing success of such exports. The competitive characteristics of Canadian forest products are appraised and compared to those of other iii important suppliers to Latin America. Provided that the present trends in production and transportation costs re• main unchanged, Canada should find no great difficulty in competing with the United States, the Baltic countries, or the Soviet Union in Latin America. Canada's position relative to Chile is also stressed and special references to the Central American common Market and Latin America Free Trade Association tariff regimes are made. It is concluded that there are excellent opportunities for Canada to increase its trade in forest products with the Latin American countries, particularly with respect to news• print and other pulp and paper products. In order to realize this potential, however, it would be necessary for the Canadian forest industries to develop a more aggressive sales strategy in the region. iv R E S U M E N El presente estudio evalua el mercado Latinoamericano de productos forestales, con especial referenda a las caracteristicas economicas, sociales y politicas que deter- inan su demanda y capacidad de importacion. Por su trascendencia economica tambien se analizan las relaciones politicas, culturales y comerciales de Canada con America Latina, y se cohcluye que entre los factores mas importantes que afectarian un posible incremento de las exportaciones Canadienses a esta region se encuentrans el desapego del pais del Sistema Interamericano (organizacion de Estados Americanos), y el aislamiento politico con respecto a las Naciones Latinoamericanas? el reducido nivel de comercio corrientemente llevado a cabo con la regi6n? el sistema de compra y venta impuesto por la ayuda financiers y tecnica entre paises; y la integracion economica de America Latina. Proyecciones de la demanda de productos forestales para America Latina indican que a medida que la region incremente su poder economico y el ingreso se distribuya mas equitativamente entre sus habitanlies, el consumo de estos productos crecera considerablemente. Estimaciones de V deraanda se establecen para los anos 1965, 1975 y 1985, agrupando los productos forestales en tres categoriass Madera Aserrada, Tableros de Madera, y Pulpa y Papel. Las estimaciones futuras de producci6n y deficits regionales reciben identico tratamiento presentandose las cifras para los mismos anos y categorias de productos. Los deficits netos de productos forestales indust- riales en America Latina se anticipa que seran en 1975s 50 3 3 mil m de madera tercida y chapas? 150 mil m de tableros de ' 3 particulas? 400 mil m de tableros de fibra? 192 mil toneladas de pulpa; y 1.279 millones de toneladas de papel de diario. En madera aserrada Latinoamerica se espera que sea auto- suficiente con un cierto poteneial de exportacion a otras regiones deficitarias del mundo. Estas necesidades futuras de importacion se han evaluado bajo el supuesto de que todos los productores de America Latina destinaran su produccion al abastecimiento de la region. Por esto, las cantidades aque obtenidas solo corresponden a cifras minimas que deberan modificarse e incrementarse en la medida que algunos paises exporten extraregionalmente. A continuacion, en razon al considerable impacto que ejerceran las exportaciones de Chile en el mercado regional, vi se establecen tambien las posibilidades futuras de produc• cion de este pais. Debibo a la existencia de La Asociacion Latinoamericana de Libre Comercio se concluye que las exportaciones forestales Chilenas ofreceran considerable y en ciertos casos total competencia a los productos Canadienses en esta region. Habiendose determinado la existencia de numerosos otros paises interesados en vender productos forestales en America Latina fue necesario establecer las caracteristicas competitivas de la produccion Canadiense. Asumiendo que las presentes condiciones en costos de transporte y produccion no sufran de cambios bruscos en el corto plazo, Canada no tendra mayores problemas en competir favorablemente en America Latina contra los productos forestales que puedan exportar Estados Unidos, la Union Sovietica o los paises Escandinavos. Finalmente, se conluye, que existen excelentes oport- unidades para la exportacion de productos forestales Canadienses a Latinoamerica, especialmente en el area de papel de diario y otros productos de pulpa y papel. La realiz- aci6n de este potencial se encuentra sujeta en todo caso, a la condicion de que la industria forestal de Canada emprenda una estrategia y politica comercial mas agresiva en toda la region. vii ACKNOWLEDGEMENTS The writer would like to acknowledge the continuous guidance and constructive criticism given to him during his entire stay at the University of British Columbia by his supervisor, Dr. D. Haley. His help, friendliness and en• couragement both within academic circles and outside is greatly appreciated. Thanks are due to Dr. J. H. G. Smith who suggested the topic for this thesis and later, as did Mr. J. V. Thirgood, offered valuable advice which helped to improve its text. Financial assistance granted by the Faculty of Forestry, University of British Columbia is gratefully acknowledged. Finally, the writer would also like to express his sincere gratitude for the unfailing support of his wife, Karin, throughout the entire study and for the considerable help received from a number of friends, too numerous to mention individually but equally appreciated. viii TABLE OF CONTENTS page ABSTRACT . i RESlSUMElftF 00OOO»0«aoOO0«O»00O*00eO000**«'90*00OOO«*O00Q«O00O* IV ACKNOWLEDGEMENTS , •. vii TABLE OF CONTENTS viii LIST OF TABLES XV LIST OF MAPS xix SECTION I DESCRIPTION AND GENERAL OBJECTIVES OF STUDY. 1 SECTION II PHYSICAL AND SOCIO-ECONOMIC CHARACTERISTIC.. OF LATIN AMERICA 10 2.1 Physical Characteristics 13 2.1.1 Geography, Climate and Vegetation.... 13 2.1.2 Position of Latin America 23 2.2 Cultural Characteristics ................... 27 2 o2.1 Early Natives oooooeaoooooo.o«.a....o 28 2.2.2 Racial Composition 29 2.3 Introduction to the Economy of Latin America 31 2.3.1 Roots of the Economy ................ 32 2.3.2 Factors of the Economy .............. 35 c ix page 2.4 Economic Characteristics of Latin America 37 2.4.1 Population Growth 38 2.4.2 Gross Domestic Product .„ 44 2.4.3 National Income 47 2.4.4 Per Capita Income 50 2.4.5 Imports and Exports 53 SECTION III FACTORS AFFECTING THE EXPANSION OF CANADIAN EXPORTS TO LATIN AMERICA 59 3.1 Canadian Detachment from the Inter-American 3.1.1 Political Isolation ................. 63 3.1.2 Reduced Commerce with Latin America.. 70 3.1.3 Potential for Future Relationships... 72 3.2 Trade Patterns Followed by Less-Developed 3.2.1 Trends Imposed by Economic Growth ... 75 3.2.2 Trends Imposed by Bilateral 3.3 Economic Integration in Latin America 82 3.3.1 Economic Development and Comparative 3.3.2 The Theory of Integration 85 3.3.3 The Latin American Free Trade Association 89 x page 3.3.4 The Central American Common Market..
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