The European superpower has changed its mind regarding international commerce
Great Britain seems to have recognized that the referendum will bring complexities regarding its trade with other European nations, which forces them to expand the scope of interest of the country towards Latin America. Colombia, Peru, and Ecuador are the three most eligible nations to engage in negotiations with the reformed state.
Brexit was the referendum held on June 23rd, 2016 where 52% of the British population voted in favor of exiting the European Union. Ian Bremmer from Eurasia Group, described the event as “the most significant political risk the world has experienced since the Cuban Missile Crisis”. The referendum has pushed the pound’s price 10% down versus the dollar and 12% below against euro.
British trade with Colombia, Ecuador, and Peru
Great Britain is Colombia’s third largest economic investor. In 2015 alone, the trade between both nations rose $1.32 billion dollars as a result of 2014’s bilateral agreement to protect and promote further investments. The United Kingdom fosters Colombian construction projects with the transaction of heavy duty machinery, power generators, and technological services.
Ecuador’s relationship with the United Kingdom has not been significant as the average yearly trade between nations is of $0.1 billion dollars. Ecuador offers crude, petroleum, bananas, crustaceans, processed fish and cut flowers, while British exports include aircraft capacities, optic, technical and medical apparatus.
Peruvian relationships with the United Kingdom are based on agricultural exports on goods such as aromatic cocoa beans, quinoa, maca, amaranth, lucuma, and specialty coffee. Agricultural exports to Great Britain have doubled from 2011 to 2015, reaching a peak level of $0.24 billion dollars. Peru possesses total imports of $35.8 billion dollars as of 2016, 4.61% are cars, which is an interesting opportunity for the European nation.
2010’s Canning Agenda was a British Government’s program to expand its presence in the Latin American market. The program was taken as a secondary priority which is subject to change as the pound’s depreciation allows the European exporters to further compete in Latin markets; it’s desirable for a growing and independent industrial sector in the United Kingdom.
Latin America has endured two great trade shocks in the last two years. The first has been China’s import contraction from the region and the second was Donald Trump’s election as the president of the United States. The nationalist perspective of the North American nation hurts the South American hemisphere as the major trade partner has moved away from its market. British considerations on Latin America will hedge production losses otherwise inflicted by the sudden shift in the United States.
Great Britain will also play an important role in Latin America’s expanding service sector, which counts on an increasing demand as middle classes have experimented gradual increments on their purchasing power since the 2010’s.
Latin American Post | David Eduardo Rodríguez Acevedo
Copy edited by Susana Cicchetto