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Latin America's 'Decade Of Opportunity' Discussed

by Mike Godfrey, Tax-News.com, Washington

04 May 2011


Latin America's emergence as an important area of interest for trade and investment has been highlighted over the course of two recently held events. Delegates at an influential forum have argued that the region has a "decade of opportunity" ahead of it, while a round table discussion on relations with the European Union stressed that a unique chance exists for the strengthening of such ties.

The World Economic Forum (WEF) on Latin America, held in Rio de Janeiro from April 27-29, took place alongside a roundtable discussion on April 27, organized by the Economic Commission for Latin America and the Caribbean (ECLAC) and the Chilean Ministry of Foreign Affairs, convened to discuss relations between the region and the EU. Opened by Brazilian President Dilma Rousseff, the WEF event was attended by over 700 regional and global leaders, representing 46 countries. It was co-chaired by Frederico Fleury Curado, president and CEO, Embraer-Empresa Brasileira de Aeronautica, Brazil; Orit Gadiesh, Chairman, Bain & Company, USA; Vikram Pandit, CEO, Citi, USA; and Sir Martin Sorrell, CEO, WPP, UK.

The mood of the event was largely positive, with delegates drawing on the efforts needing to be made to ensure the region's continued progress. According to the event's organizers, it was noted that Latin American nations would need to devise ways to make the leap from commodity exporter to having solid services industries, along with tackling issues such as infrastructure problems, high crime rates, corruption and political divisions. Mexico's Economic Secretary, Bruno Ferrari Garcia de Alba, said the region's economies must be integrated, in order to ensure continued prosperity. "We need to enhance the relationships between ourselves. When you think of Latin America, you are thinking of a market of 550 million people … that is having the second largest [level of] growth in the world after Asia".

The strong position afforded to Latin America by a growing demand for commodities in India and China, and by the region's natural resources, was seen as having been immensely beneficial in recent years. As a result, Leonel Fernández, President of the Dominican Republic, said that: "Even in the midst of difficult circumstances [and] financial turbulence in the world, Latin America has continued to grow and has remained stable". He pointed to a bright future, with economies bolstered by surging GDPs.

The longevity of such economic progress was also referred to. Curado envisages a "decade for Latin America", with Luis A. Moreno, President of the Inter-American Development Bank saying that: “We truly believe that this is the decade of opportunity for Latin America". While Brazil's potential to establish itself as a production powerhouse stands out, attendees such as Sorrell also concluded that rapid growth in Paraguay, the extent of the Argentinean financial recovery and improving security in Colombia were aiding the establishment of powerful countries beyond Brazil.

Meanwhile, the round table discussion was presented with a publication, authored by the ECLAC, titled "In search of a renewed partnership between Latin America and the Caribbean and the European Union". This meeting was held as part of the ongoing preparations for the seventh Latin America, Caribbean and European Union Summit (LAC-EU), to be held in Santiago, Chile in May, 2012.

According to the ECLAC, its report notes that the EU has lost some of its standing as a trading partner of the region, and that, while it remains the region's second trading partner, it is likely to be overtaken by China within three or four years. Nonetheless, the EU has provided the main source of direct foreign investment in the region over the past decade. As a result, the ECLAC sees the strengthening of relations with the EU as an opportunity to tackle major challenges, such as remaining gaps in poverty, inequality, technology and innovation. The EU is seen as offering the chance to develop public-private cooperation networks with businesses and governments in the region. In addition, the EU is likely to benefit from any initiatives, for Latin America is deemed as providing valuable new sources of economic growth and a supply of natural resources.

Looking ahead, the ECLAC's Executive Secretary, Alicia Bárcena, said that: "Latin America is being seen with new eyes by the entire world, and several regions and countries are now seeking partnerships with our continent. We have a unique opportunity to devise a medium-term strategy with the European Union that will forge a strategic relationship".

"Together we can move towards a more comprehensive public and private partnership, in which governments and businesses come together around common goals," Bárcena added.

In recent weeks, crucial developments have occurred in the negotiation of Latin American trade deals. The EU struck a deal with Colombia and Peru, intended to substantially open up markets on both sides, increase the stability and predictability of the trading environment, and generate considerable duty savings. Once implemented, the agreement is designed to establish conditions in which EU operators will be able to take full advantage of opportunities in Colombia and Peru, largely occasioned by an extensive reduction of tariff barriers. Trade between the EU, Colombia and Peru was worth EUR16bn in 2010. The EU exported EUR3.9bn and imported EUR4.7bn in the case of Colombia, and exported EUR2.3bn and imported EUR5.1bn in the case of Peru.

Furthermore, a Latin American trade bloc appears to have edged nearer, with Mexican, Chilean, Colombian and Peruvian representatives coming together to participate in working sessions designed to establish a Pacific Accord. The Mexican government has stated that this alliance aims at deepening Latin American integration and will serve as an active component of engagement with the Asia-Pacific region.

TAGS: economics | business | Chile | India | Paraguay | China | Colombia | Mexico | Bolivia | Brazil | Dominica | Dominican Republic | Peru | United States | trade | European Union (EU) | Argentina | Europe

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