LatAm INVESTOR: In recent decades the UK neglected Latin America; why has this Government paid more attention to the region.
DPM, Nick Clegg: As Latin American economies, like Brazil, have grown in recent decades, they’ve increasingly been taking a global lead on issues like sustainable development and poverty alleviation in the UN and other multilateral organisations. Politically, the UK shares a lot of these same values and priorities and, given our relationship with many of these countries goes back centuries, it makes sense for us to work more closely together.
“Latin America can offer UK companies huge growth opportunities…”
For example, earlier this year, I visited Mexico and Colombia. As members of the Pacific Alliance, these two countries – along with Peru and Chile – represent a group of outward-looking and open Latin America economies. And, with a combined GDP of $5.7trillion and average growth rates of 4-5% forecast across the region in the next five years, Latin America can offer UK companies huge growth opportunities. Yet, back in 2010, UK exports made up just 1% of Latin America’s total global exports. That’s ridiculous. And, since 2010, our Government has been committed to ensuring that more British businesses can compete and grow in these markets.
LAI: What has this Government done to boost the UK’s presence and influence in Latin America?
NC: Right now, we have dedicated UK Trade and Investment (UKTI) teams working across Latin America – with organisations like the Chambers of Commerce and others – to provide support and advice to British businesses interested in these markets.We’re boosting our diplomatic presence on the ground. We’ve opened new Embassies in countries like El Salvador, Paraguay and Haiti and a Consulate-General in Recife, Brazil. And we’re creating new networks of trade experts to identify and promote trade opportunities for UK companies. Ministers are also leading more and more UK trade delegations to our target markets. So, no-one should be in any doubt that we’re very serious about what we want to achieve here.
LAI: Latin America is a large and diverse region; what are the most promising Latin American economies for British companies?
NC: To go back to my previous example, I think Mexico and Colombia are incredibly promising. These are two of Latin America’s biggest trading nations. And, with the costs of doing business in China, India and elsewhere rising, economic experts everywhere are talking about the huge growth potential of these countries in the future.
Each has a massive consumer base, with a population of 46 million in Colombia and 116 million people in Mexico. This includes a growing middle class. Aston Martin recently launched their first dealership in Mexico – highlighting the increasing demand for luxury goods throughout the region. These markets also offer competitive, skilled workforces. And the Governments in both Mexico and Colombia are implementing essential market reforms to open up their economies further and secure the long-term stability and prosperity of their countries. This is creating opportunities for British businesses across supply chains. During my own visit, I led one of the largest and most senior UK business delegations to ever visit these economies, with £158 million worth of deals signed in Colombia alone by UK companies during our trip.
LAI: In the last decade, companies from Asia and some of our European neighbours have made massive inroads in Latin America; what advantages does UK plc have when it comes to doing business in the region?
NC: We want to ensure that companies across this region see the UK as their partner of choice. And British businesses are a great fit for the markets – offering the skills and expertise they need to help drive growth.
For example, we’re home to some of the world’s best universities and leading educational organisations, who are ready to help companies boost their workforce skills. With a world-class innovation base, we can work with Latin American companies to develop and commercialise cutting-edge products and services – driving growth. And UK energy companies have a wealth of private sector expertise, experience and investment to help this region meet its energy needs sustainably and effectively in the decades to come.
In return, the UK can also offer this region’s entrepreneurs one of the best places in the world to do business. As Europe’s leading destination for foreign direct investment, we have a competitive business environment, a skilled, flexible workforce and we provide unrivalled access to global markets and growth finance.
LAI: Latin America presents many cultural, legal and language barriers for British firms; how can the UK Government help companies that are looking to expand to the region?
NC: It is something our whole Government is focused on supporting – whether through competitive export finance or targeted investment and support. In addition to our work with Chambers of Commerce across this region, UKTI has local experts on the ground in 14 Latin American markets including Brazil, Colombia, Mexico and Peru. These dedicated teams are there to help British companies grow their business and tackle any of the issues that might come up working in these markets.
“Overall, our ambition is to increase total UK exports to £1 trillion a year by 2020…”
We’re also investing a further £2 million a year to increase UKTI’s presence in Latin America. This includes work to help British businesses target valuable trade contracts and projects in high-growth sectors such as education in Colombia, mining in Chile and working with Petrobras in Brazil.
LAI: It’s easy for a government to declare a strategic interest in a region, but what long or medium-term targets has the Government itself set for improving trade and business links with Latin America?
NC: Overall, our ambition is to increase total UK exports to £1 trillion a year by 2020. Our exports to Colombia have already increased by 126% between 2009 and 2012 – the highest of any emerging power. We’re now the second largest foreign investor in Colombia, with trade increasing in business services, automotive and retail as well as equipment and machinery.That’s impressive, but it’s still a fraction of what we could achieve. So, together with the Colombian Government, we’ve set a new target to boost our bilateral trade to £4 billion by 2020. That represents a threefold rise in the size of UK exports to Colombia in the next six years. And in Mexico, we’re committed to increasing our annual bilateral trade to £4.2 billion by 2015. Currently, our share of this market is only 0.8% and, with the huge potential for growth, we want to double that figure by 2020 at the very least.