UK seeks to revive post-Brexit trade links with Latin America

May, 26, 2023 Posted by Gabriel Malheiros

Week 202324

The UK hopes its accession to an Asia-Pacific trade treaty will open markets for British business in Latin America, part of a wider effort to revive links with a region long neglected by London.

Concluding a trip to Colombia, Chile and Brazil, foreign secretary James Cleverly said trade levels with Brazil’s $2.1tn economy were “not as high as they should be”, partly because of a lack of mutual understanding.

“With some British businesses, they don’t think of Latin America,” he told the Financial Times. “We need to make sure that . . . this is a region which is on the shopping list of British businesses.”

Although it has a population of 664mn people. Cleverly noted in a speech in Santiago, Chile, that Latin America accounted for just 2 per cent of UK imports and 2.5 per cent of exports. “I recognise that there is much more to do,” he said. “We should be ambitious for our future relationship.”

Part of the government’s answer is the Comprehensive Trans-Pacific Partnership. The UK completed negotiations in March to join the pact, which groups Asian powerhouses such as Japan and Vietnam as well as Pacific nations including Chile, Peru and Mexico. Costa Rica, Ecuador and Uruguay have also applied to join.

However, the UK faces an uphill struggle competing with China, whose voracious appetite for food and critical minerals during the past two decades has made it South America’s biggest trading partner.

Chinese companies have been buying up lithium and copper mines across the region, as well as much of the soy and meat produced by Brazil and Argentina.

Asked whether he had announced any business or investment deals during his visit, Cleverly said his trip was “not a simple short-term transactional thing” but was “about reinforcing a serious, really important long-term bilateral relationship”.

He also highlighted his journey to the Amazon rainforest to visit a scientific project and his signing of a climate partnership agreement with Brazil, building on £80mn of funding to help combat deforestation announced this month by UK prime minister Rishi Sunak.

Cleverly’s week-long visit was the first by a UK foreign secretary in five years but it skirted Argentina, South America’s second-biggest economy, where a long-running dispute over British sovereignty of the Falkland Islands continues to sour relations.

Jeremy Browne, chief executive of the Latin America forum Canning House, said that Cleverly deserved credit for “swimming against the institutional tide to give greater attention to Latin America”, given an “obvious post-Brexit trading opportunity”.

But he added: “The test will be whether the foreign secretary and wider government can sustain a more multidimensional global outlook, moving from a narrow view of foreign policy interests to embrace new partnerships in previously neglected parts of the world such as Latin America.”

A previous effort by William Hague as foreign secretary in 2010 to relaunch the relationship with Latin America failed to boost trade and investment levels. The government’s updated defence and foreign policy review published in March mentioned Latin America only once in 63 pages.

Cleverly said the review “wasn’t designed to be a kind of name check or spotters guide to countries and regions” but had made clear the increasing importance of the Indo-Pacific region, which included the Pacific coast of Latin America.

A senior Latin America diplomat based in London welcomed the UK’s renewed focus on his region but questioned how realistic London’s aspirations might be.

“We see a certain element of overstretching,” he said. “The UK has the Indo-Pacific tilt, the war in Ukraine, the special relationship with the US, and revived EU relations. That’s a lot of priorities.”

Source: Financial Times

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