Latin America must court the United Kingdom after its divorce

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Given the imminence of Brexit, it is time for Latin America to meet the new business needs of the United Kingdom

The divorce of the United Kingdom with the European Union (EU) is still faltering, and, between extensions and no deals, it is not known when or how it will be resolved. In what the British parliament has not faltered, however, is in its intention to continue the process that seems to have taken an irreversible course towards the unraveling of 40 years of economic integration.

Leer en español: América Latina debe cortejar al Reino Unido tras su divorcio

If there is no tariff agreement between the divorce paperwork, the United Kingdom would lose access to the European common market. In this scenario, beyond the geographic and political proximity with the other European States, the United Kingdom would have little incentive to trade with them over any other region of the world.

Furthermore, taking into account that the United Kingdom would now be excluded from all free trade agreements that it accessed through the European Union, they will have little incentive to privilege trade with any State in the world over another. In many ways, this is a clean slate for the United Kingdom's participation in international markets.

For Latin America, this is a unique opportunity to obtain preferential treatment in access to a huge market (of 66 million inhabitants) and well-off (with a GDP per capita in excess of $ 45,000 dollars). It is also a market that will be vulnerable to the sudden deregulation of trade and will be urged by new business partners after losing its principal.

The assets left behind in this divorce add up to a substantial amount. The United Kingdom imported more products from the European Union (a total value of $220 billion dollars) than the rest of the world (only $192 billion).

Moreover, it not only mattered in large volume, but exported considerably less. The United Kingdom maintained a trade deficit with the EU of more than $86 billion. For Brussels, this was a very advantageous commercial relationship, and if there is a no-deal scenario almost overnight, it will no longer be so. It will be then when the doors are opened for other commercial partners eager to fill the vacuum of exports from the European Union to the United Kingdom.

Latin America must be a candidate to partially supply the imports that will stop arriving with the advantage of the European Union. Signing trade agreements and engaging in business dialogue will be essential for the region to become a powerful trading partner in Europe, which can also be accessed without having to circumvent the costly bureaucratic obstacles that hinder trade with the EU.

Also read: A lie written on a bus: this is the real cost of Brexit

The opportunity, however, is not round. The main imports from the United Kingdom are manufactured goods, many of which, as in the case of turbojets, the fifth largest import in the United Kingdom, do not occur under competitive conditions in Latin America.

Many others, however, such as mining and oil products and simpler manufactured goods, such as auto parts and wines, may find a new and attractive destination in the United Kingdom.

LatinAmerican Post | Pedro Bernal

Translated from "América Latina debe cortejar al Reino Unido tras su divorcio"