Globe, Latin America, United Kingdom

Talking about Brexit (5): the new Latin American experience

While the departure from the European Union is getting close, the possibility of getting access to the single market is still under negotiation. Great Britain is looking for new trade relations and Latin America seems to be a promising option.

 

Marcella Via

 

On June 26, Spain’s foreign mister said that “Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit will be rejected by an angry France and Germany”.

Hostility towards the United Kingdom does not only come from European countries, as different industries have warned that they will move out from Great Britain, unless preferential access to the single market can be secured in the negotiations.

Therefore, the United Kingdom currently needs to establish new international ties to ensure its predominance on the global market.

Exiting into the European Free Trade Area (EFTA) could give Britain the possibility of creating new alliances with countries that consume the goods it exports, and Latin America seems to be a great new friend for London. The British-Latin American relationship has been very intense during the 19th century, when Great Britain was the leading external economic and political power in the region.

However, this relation started to cool down with the First World War, until 2016, when the United Kingdom only supplied 0.9% of Latin America’s imports and received just 1.2% of its imports. While Latin America maintained  close ties with China, the United States and other European countries such as Spain and Germany, the departure from the EU might imply new possibilities for the United Kingdom.

Looking for new friends

Since last year, the United Kingdom started its search for new “friends” in the international arena, in order to attempt to maintain its international influence and keep up with the global trading market.

Because the United Kingdom wishes to be part of the growth of emerging economies at a global level, London wants to develop new ties with the Latin American region, as it is one of the most powerful emerging markets.

In August 2017, the British International Trade Secretary travelled to Colombia to meet the new Colombian Trade Minister and start a new trade dialogue with Colombia, Peru and    dor.

There, he announced that “the United Kingdom Export Finance is going to double the financial support for trade with Colombia to 4.5 billion pounds”.  At the same time, the financial support given to Peru will double to £4 billion.

Moreover, on May 19, Foreign Secretary Boris Johnson started a five-day trip to South America, visiting Peru, Chile and Argentina in order to represent the United Kingdom at the G20 in Buenos Aires.

Being the first British Foreign Secretary to visit  Argentina and Chile for 25 years, and 50 years in the case of Peru, he said that Great Britain “has neglected Latin America’s realms of gold for too long”.

During his tour Johnson was particularly impressed by the Chilean economy, as Chile has 24 deals with 64 nations, comprising 85% of the global GDP.

International Treaties: texts remain 

The interest of a new relationship with the South American countries is purely economic and the United Kingdom is wishing to start a free trade agreement to sustain commerce with the Pacific Alliance after its departure from the EU.

The Pacific Alliance is an economic and political bloc made up by Chile, Colombia, Peru and Mexico. Created in 2011, the aim of the alliance is to gradually move towards the free movement of goods, capital and people.

The United Kingdom is particularly attracted by the Pacific Alliance because of its embedded neoliberal character. Indeed, the purpose of the alliance is also to establish a difference from the protectionist Mercosur, which is composed of Argentina, Brazil, Uruguay, Paraguay and Venezuela and was created in 1991.

However, Mercosur countries have also been considering starting new dialogues with the United Kingdom, as that would be easier than maintaining their economic relations with the EU states.

For example, the Brazilian ambassador stated “the European market is very closed to agricultural exports from Brazil, Britain is a free trade country. At the same time, the desire to increase agricultural exports would be one of the major prizes for any trade deal by Latin American states”.

Moreover, the Chilean Foreign Minister Roberto Ampuero particularly welcomed the British intention to start a new dialogue with the region. He said that for Chile: “it is important that there are no delays… so that we can both be beneficiaries of a free trade agreement the moment that Brexit is realized”.

As reported by the Santiago Times, Chile and Great Britain are planning to start a bilateral Free Trade Agreement (FTA), to increase the trade of goods and services and reduce trade barriers. Following this wave of neoliberal enthusiasm, Boris Johnson added, “Already UK bus companies are bidding to supply London double-deckers to the streets of Santiago”.

Friends will be friends? 

According to Boris Johnson and the Foreign Ministers of the members of the Pacific Alliance, every member will benefit from this new trans-continental trade dialogue. However, it is not a secret that free markets are dangerous, especially for emerging economies.

While international corporations will benefit from the new deal, both people and the environment become unsustainably exploited.

Free trade inevitably leads to increasing working flexibilization and deplorable working conditions, job losses, and it negatively affects the environment, among other consequences. A major example of this has been the North American Free Trade Agreement (NAFTA), which cost  $36 billion per year in pollution.  Another example is the Maquiladora program, which employs 30% of Mexico’s labour force ultra-exploited its workers, as they work 12 or more hours per day and had to give up to all labour rights, including health protection.

Moreover, the Global Britain strategy has also received strong criticism in the United Kingdom because of the resources available.

As pointed out by Thomas Mills, from Lancaster University, while Britain negotiates its withdrawal from the European Union, it is seeking to strengthen bilateral agreements with old European friends.

For this reason, doubts have been raised regarding the plausibility of simultaneously establishing new relations with the South American countries.

(Photos: Pixabay)

 

 

 

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