Brexit begins: what are the real effects for Latin Americans?
On March 29th, Prime Minister of the UK Theresa May triggered the Article 50 of the European Union treaty. With that, she has made Brexit officially inevitable. From now on, they have two years to undo Britain’s membership. The negotiations won’t be easy and will, certainly, pose serious doubts on the economic future of the UK. Due to the historical relevance of the UK in the economic climate, this same uncertainty has tainted the near future of the global economy, including Latin America. So, let’s be clear: how does Brexit affect Latin America?
If you take a closer look to the trade and economic relations between Latin America and the UK, you’ll see that they’re not as strong and numerous as you may have initially thought. For most countries in South America, the percentage of exports are between 0,9% and 1,8% of total exports. A decrease in trades between the UK and Latin America, for the most part, won’t have a significant effect on either side. However, if we go beyond the UK and analyze the trades between Latin America and the EU, the effects are more difficult to dismiss. Currently, exports of Latin American countries to European countries –excluding the UK– average a 10% of total exports. Still a low percentage but, nevertheless, not negligible. Then, as analysts have noted, the effects of Brexit on Latin America will be greater due to its negative impact on the EU’s economy.
There’s another negative effect of Brexit that goes through the relation between Latin America and the EU, and it can be harder to predict. LatAm Investor argued that, during the negotiations of the terms of Brexit, the EU would, likely, put on hold every other treaty that’s not priority. This would affect the Mercosur and EU free trade agreement.
Now, can Brexit have positive effects on Latin American economy? Some say that it can but these arguments have to be carefully examined. It goes like this: since the UK will have to renegotiate its current benefits with the EU, they’ll have the need to look for new treaties. In this case, Latin America seems like a potential commercial partner for a weakened UK. However, is this the best option for Latin America? Is it not better to avoid a conflict of interests and try to lay the foundations for a better relationship with the EU?
In any case, if the current relations between the UK and Latin America are, at best, marginal, it may be better to keep them that way for another two years.