To supercharge exports to Latin America post-Brexit would be to link up with some of the region’s existing trade blocks. In a recent paper on 10 Years of the Canning Agenda, Canning House reviewed the option. There has been an 11.2% increase in the export of UK goods to Latin America and the Caribbean (LAC) from 2010-2018, yet this significantly lags the 39.9% increase in UK exports to all regions over the same period. In 2018, the LAC region accounted for just 1.68% of UK exports, the lowest of any world region apart from Sub-Saharan Africa, and indeed UK participation in LAC total goods trade has been declining, to 0.8% in 2018 from 1.10% in 2010. Yet the array of Latin American trading and cooperation blocs could potentially further the aims of the Canning Agenda and the UK’s post-Brexit ‘Global Britain’ strategy. Latin America’s moves towards integration have had varied degrees of success. The oldest surviving regional organization in Latin America is the Andean Community of Nations (CAN), comprising Bolivia, Colombia, Ecuador, and Peru, which came together in 1969. Yet took until 1993 for CAN to implement a free trade area, and a customs union followed in 1995. Since then, a plethora of new trade blocs have sprung up.
After 20 years of negotiation, of a free trade agreement between Mercosur, Latin America’s largest trade bloc, and the European Union is a positive development. However, there remain significant hurdles to ratification. One concern is the environment, with European disquiet over Brazilian destruction of the Amazon. Another obstacle is the renewed tensions and ideological divide between Argentina and Brazil. If the UK is to benefit from a future relationship with Mercosur, it will require determined overtures from London, which are happening, and improved co-operation between Brasilia and Buenos Aires, which is not. While shared membership of the bloc did bring the two nations closer together for a while, Mercosur has never really gelled, and most analysts concur that Mercosur has largely failed. Latin America’s increasing interaction with Asia-Pacific countries, through the Pacific Alliance and the CPTPP, has clearly piqued the UK’s interest. Britain applied to join the CPTPP, which already counts Mexico, Peru and Chile as members, along with Canada, Australia, New Zealand and several Asian Pacific countries. Announcing the UK’s CPTPP bid, International Trade Secretary Liz Truss described this as a strategic move intended to support an industrial revival and to help diversify our trade so we are less vulnerable to political and economic shocks. Brexit has forced the British government to directly engage with many countries in Latin America, as it has had to sign continuity trade deals to ensure the benefits of existing EU deals were not lost. Over the next decade the UK will need to maintain this increased level of engagement to help boost the current, moderate, trade levels.