No-Deal Brexit: A Win for Latin American Exporters?
With the possibility of a no-deal Brexit looming ominously on the horizon, fresh produce traders in the UK may find themselves looking to new regions for reliable imports that Europe may no longer be able to provide – namely Latin America. Although recent efforts to improve economic ties between Latin America and the UK have not met with the anticipated levels of success, the possibility of Britain gaining the capacity to negotiate its own free trade deals may be a key factor in improved relations.
Many importers of fresh produce in the UK are concerned that increased transport costs caused by a potential no-deal Brexit will be passed on to consumers. According to trader Peter Marshall, quoted in an article by Edward Curwen for the BBC, “We’re going to have to pass the cost on…your profit margin is suddenly going.” This concern over increased costs could lead to importers looking to new regions for savings.
According to gro-intelligence.com, an agricultural data platform, “41 percent of [the UK’s] fruits and nuts imports originated from the EU.” In addition, the site notes that the UK produces just slightly under half of its food, and that the island nation possesses a “€9.2 billion trade deficit,” in the area of fruits and vegetables. This dependence on fresh produce imports from within the EU is a precarious position for a UK entering into ever-deeper Brexit uncertainty.
In order to ease this dependency, the UK will have to pursue favorable trade deals with regions outside the EU, and Latin America is poised to be amongst the most attractive. According to Joanna Crellin and Edward Elliot, writing for the London School of Economics and Political Science, Latin America is “a region which UK businesses can no longer afford to ignore…[it possesses a] burgeoning middle class with an appetite for the kind of modern goods and services that UK companies can provide.”
For over a decade, government officials in the UK have sought to improve economic ties with Latin America, and although progress has been slow at times, the possibility of a so-called ‘Global Britain’ has investors in both regions excited about the possibility of improved relations. The Canning Agenda, proposed by UK Foreign Secretary William Hague in 2010, outlined a plan to stimulate British trade and investment in Latin America. According to a report from the British Foreign Policy Group, “while substantive efforts to improve Britain’s economic standing in Latin America have met with some success, they have not made any significant difference to Britain’s overall standing in the region…” However, the report notes that the Canning Agenda provides “ a firm base on which to build our future relationship.”
Clearly, then, there is an interest on both sides to pursue stronger economic relations. However, these interests have until this point been limited by the UK’s reliance on fresh produce imports from the EU. The precarious and uncertain position in which Britain currently finds itself may be a blessing in disguise, as it may open opportunities for Latin America to make economic inroads into markets that are likely to be destabilized by Brexit.
With some clever strategizing and proactive networking, Latin American fresh produce exporters are sure to see significant opportunities in a post-Brexit UK.
Don’t miss more insightful content from Farmfolio. Click here.