Speech

Latin America Investment Forum

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

The Foreign Secretary William Hague spoke about Britain’s relationship with Latin America at the Latin America Investment Forum.

The Rt Hon William Hague

The Foreign Secretary said:

In one of my first speeches as Foreign Secretary I stated our determination to reinvigorate Britain’s relationship with Latin America; igniting a new era of intensified cooperation with a region that is growing in stature and in confidence, and which nobody can afford to ignore. Today I want to reassert my commitment to that policy and our ambition for taking it forward with common endeavour in the years ahead.

It is a pleasure to give this address to a Forum that will, I hope, play a vital role in turning that vision into reality. For in a world where the connections between business leaders are as important in many ways as those between governments, it is organisations like the Latin American Trade and Investment Association that will be boosting exports and encouraging the investment that will lead to mutually beneficial growth. So in every respect, you are at the heart of this effort.

The objective of the policy that I set out in my Canning Lecture in 2010 was clear: to form modern and adaptive relationships with the countries of Latin America; relationships fit for the 21st Century. For too long our historical links had been allowed to whither away– demonstrated most vividly by the closure of seven of our diplomatic posts in the region between 1997 and 2010, just when Latin America was forging ahead with energy and vigour.

And now, with the largest group of democracies outside Europe, falling poverty, and a larger middle-class than India and China combined, the region has become a beacon of political and economic stability. And is increasingly influential in world issues. The choice of the new Pope is a proud moment for Latin America.

It is at the cusp of progress and innovation, with the Colombian city of Medellin recently voted the most innovative city in the world.

And it is playing a central role in tackling pressing international issues from climate change to the economic crisis, and from the Arab Spring to international development. In almost every respect, Latin America is a natural partner of the UK and an increasingly attractive place for our companies to do business.

And that business is now more important than ever, as the expansion of trade is a national priority. We realise that long-term, sustainable growth cannot be built on government spending alone. Instead, we need to break into new markets, reduce our trade deficit and attract greater investment. And Latin America, with its large and growing market of 590 million consumers, is central to that effort.

It was therefore vital to reverse Britain’s retreat from the region. Instead of closing Embassies and Consulates, we would open new ones and increase the numbers of our diplomatic staff across the continent. Instead of being blind to the commercial opportunities on offer, we would encourage Latin American investment in the UK, raise the profile of the region with British business, and help British companies gain access to markets. And instead of sporadic ministerial engagement, British ministers would invest the time and effort needed to create a more intense but equal partnership.

And since 2010, we have been working to turn that vision into reality:

We have opened a new Embassy in El Salvador and a Consulate-General in Recife; and will be opening new Embassies shortly in Paraguay and Haiti later this year.

We have increased the number of diplomats at eight posts across the region, and created new networks of prosperity officers; giving us the ability to engage more widely on trade issues, commercial opportunities, climate change and energy policy.

And we have increased the frequency of ministerial visits, with over 50 since the government came to office, including thirty to Brazil alone.

This stronger and more consistent British engagement has begun to produce results, and there are some in particular that I want to highlight:

First, there has been a notable increase in our bilateral trade, with UK goods exports up by 12% in 2011 and up by a further 11% in 2012. The latest figures show that to Colombia alone we have increased total exports by 50% in each of the last two years.

Second, British companies have been securing contracts in the hydrocarbon sector and capitalising on our experience of hosting a successful Olympic Games. Whether it is Petrofac helping to develop onshore production in Mexico, or AECOM producing the Masterplan for the Rio Olympic Park, our companies have had notable successes.

Third, we have created important partnerships and began dialogues to help remove barriers to business such as money laundering, intellectual property, and corruption.

And finally, beyond our commercial links, we have been deepening our relationship on security and climate change issues by supporting Colombia’s efforts to combat the narcotics trade, and assisting Mexico in passing legislation on domestic climate change targets.

These examples show that our policy is beginning to work. But this is only the beginning, and we have considerably more to do.

We still trade two and a half times more goods with Belgium than we do with the whole of Latin America, even though Belgium’s economy is half the size of the state of Sao Paulo’s. And while we are the second largest investor in Colombia, the UK comes fourteenth on the export of goods to the country.

We also face strong competition we must acknowledge, both from the more established economies in Europe and North America, and the surging economies in Asia, the Gulf and Africa.

To meet this challenge, we need to build on the successes we have had and intensify our relations further. That means supporting British companies that want to enter Latin American markets, producing the goods that Latin American consumers want to buy, and making the UK an attractive destination for Latin American investment. It also means looking beyond our commercial ties to strengthen cooperation on some of the major security and political challenges of our time.

The reasons that have made Latin America more conducive to British investment have also made it a natural partner of the UK within international organisations. The spread of democracy, growing respect for human rights, and the concerted efforts to tackle global issues such as climate change, mean that we share many of the same values and aspirations.

And this common purpose should be reflected in our level of cooperation in multilateral forums such as the G20, UN, and World Trade Organisation, where we want to work together to restore global growth, combat the narcotics trade, push for a global deal on climate change, and ensure the safe production and supply of energy.

These pressing issues are global in nature, they require a global response, and that response must have the countries of Latin America at its centre. That is why we will continue to call for reform of the UN, including an expanded Security Council with Brazil as a permanent member.

But as the focus of this forum is on trade and investment, I want to emphasise three areas where the UK needs to take action in the coming years:

First, we are determined to implement the reforms at home that will help bring Latin American investment to our shores. This government is rebalancing the British economy to ensure that we remain competitive in the global race. We are reducing the rate of our corporation tax to 21% by 2014, so that we can help nurture innovation in science and technology; we are reforming education, so that our workforce remains one of the highest skilled in the world; and we are taking decisive action to tackle our budget deficit, so that foreign investors have confidence in the UK economy.

Britain also has an abundance to offer and we need to advertise these advantages across Latin America. We are second in the EU for Ease of Doing Business in the whole world, we have the strongest R&D environment in Europe, more international firms have their European headquarters here than anywhere else, and we have a highly-skilled workforce.

Second, we need to show that the UK is well-placed to support Latin America’s extraordinary rise.

Countries in the region can look to British expertise and experience in Private Public Partnerships, which has helped to inject capital, efficiency and dynamism into large-scale infrastructure projects.

We will also be at the forefront in helping to develop the hydrocarbon industry, by providing the infrastructure that will enable countries such as Venezuela, Mexico and Colombia to exploit their significant oil and gas reserves.

And, as a world leader in education, the UK will be intensifying engagement with Latin American universities and research institutions, and working to increase the number of students that study in each others’ countries so that we can create lasting bonds between our future leaders.

Thirdly, and above all else, we will encourage and support UK companies to invest in Latin America’s fast growing and increasingly accessible markets. Many governments across the region have implemented fundamental reforms that have made their economies more open, transparent and competitive.

Chile is a prime example of a market that is actively embracing foreign investment and open trade. It has passed legislation that means a company can be established in one day, for free, and completely online; and it is offering foreign business a financial grant of US$40,000 and a fast-track visa service through the ‘Start up Chile’ scheme. Almost 30 British companies have taken advantage of this scheme already, and we want more to seize this opportunity and others like it.

So that is why we are transforming business to business support overseas. Following the lead of Germany, we will use our overseas business networks to create more opportunities for UK companies. Lord Green, our Trade and Investment Minister, is working with British business at home and abroad to increase the quality and quantity of the services that our Chambers of Commerce offer, particularly to small companies that want to gain a foothold in foreign markets. We are beginning with an £8 million pilot project in twenty priority countries that include Brazil, Colombia and Mexico, before extending to Chambers of Commerce across Latin America and globally.

So my message to British business is simple: go and take advantage of what the region has to offer; invest, compete and make yourselves a part of Latin America’s rise.

At the same time, this government will work to open markets and remove barriers to trade, because we recognise that nothing stifles the spirit and vitality of business more than protectionism and corruption.

Of course, it is natural that at times of economic difficulty governments instinctively look to secure their people’s jobs and protect domestic markets. So it is no surprise that we have seen a rise in protectionism in recent months, with many of the measures coming from G20 countries themselves. But history tells us that protectionism favours the most vocal and influential in the country, and not the country as a whole. In the long-run it will only impede economic growth in the region.

And so the UK will continue to be a strong voice against protectionism and a staunch advocate of EU Free Trade Agreements with Latin America. The ratification of the agreement with the Andean region and last year’s signing of an ambitious and comprehensive deal with Central America will open markets on both sides and help to create a more predictable trading environment. And we will continue to push for an ambitious agreement with Mercosur.

The vision and flexibility that Latin American states have shown in reaching these deals demonstrates their long-term commitment to free trade, and I hope that we can continue to work together in countering creeping protectionism and pushing for global trade liberalisation. If we are successful, then it will be good for the world economy, good for the British economy and - most of all - good for the economies of the region.

So we have set our policy on a course that will support trade and investment between the UK and the countries of the whole region.

But this is merely the beginning of a long-term project.

We need to maintain and nurture the links that we have forged in education, science, innovation and business, and pass these links onto the next generation of leaders.

We have to make a compelling argument for how we can support the region’s rise, what the UK can offer Latin American investors, and why British goods and services are better than those of our competitors.

And so to those companies in the UK that are ready and willing, I urge you to seek out these opportunities, to profit from the region’s vibrant and growing markets, and to bring great benefit to Britain in the process.

And when you do, this government and our whole diplomatic network will support you every step of the way.

Further Information

Read the Foreign Secretary’s Canning 2010 speech

Published 14 March 2013