Latin America Is Opening Up For Australian Trade
Australia and Latin America are separated by the wide Pacific Ocean. These seemingly polar regions are entirely different in terms of language, practices, and culture. However, globalization continues to emerge, transcending such boundaries. It’s good to know these regions influence each other in many ways, especially in business. Australian trade has never been this diverse since the last decade.
This connection might have been influenced by history itself. For instance, dating back to as early as the 18th century, Brazil had been trading with Australia already. Also, Mexico allied with Australia during World War II.
At present, this healthy relationship has been supporting economic growth and development between the two regions. Between 2015-2016, the Australian trade with Latin America amounts to AU$11.2 billion. Having said that, there are still minimal flaws to the system, due to inevitable views from few Australians towards the Latin district. Asian markets are also alluring due to proximity, cost-effectiveness, and historical ties with the land down under. In other words, the foundation for an Australian-Latin American trading partnership is already existing, albeit shaky.
To strengthen these ties further, both regions must take action. Latin America needs to be more cohesive when it comes to economic reforms. As much as possible, each nation must work together in welcoming foreign investments. This will improve their business partners around the globe. On the other hand, Australian businesses can check out these attractive opportunities in this article. This will give an insight on which nations have the strongest potential for Australian trade.
5 Prospective Latin American Economies for Australian Investment
The world of international investment has been incessantly experiencing an upward shift. This rise in the economy is evident in Latin America as well. Looking ahead, Mexico is expected to be the 7th largest economy by 2050. Meanwhile, developing economies like Argentina, Chile, Colombia and Peru display promising and progressive potential.
Some of the top business opportunities for Australian trade are now available in the Latin region. Collaboration between the two regions has been more possible than before. This is due to some of the Latin American nations improved diplomatic relations and reforms. You will find some concise points below about these favorable economies.
Australian exports to Argentina are worth AU$234 million in 2018, approximately two times the 2014 figure. Some of the main Australian exports to Argentina include coal, fertilizers, crude plant matter, and power-generating machines and parts. Argentina’s industrialized base includes agribusiness, automobiles, pharmaceuticals, chemicals and petrochemicals, biotechnology and design manufacturing.
Australia and Mexico have a wide-ranging background of bilateral agreements. These include a ‘Memorandum of Understand´ (MOU) on Cooperation in Agriculture (2010), an MOU on Energy (2005), and more. Mexico is still Australia’s largest merchandise trading partner in Latin America in 2018 with two-way trade worth over AUS$3 billion. In fact, many major Australian companies have been making their way to Mexico. These businesses span across a variety of sectors, including advanced manufacturing, education, energy, food, agribusiness, health, infrastructure, mining, and technology.
In 2018, Australian exports to Chile reached AU$656 million. The trade relationship between Australia and Chile originated from the Mining and METS (mining equipment, technology, and service) sectors. While the mining sector remains strong, Australian trade in other sectors have increased significantly as well. These include agriculture, genetics, food, infrastructure, health, transport, and logistics.
This 2018, Australian exports amount to AU$465 million. The Australia – Colombia MOU signing reinforced the relationships between the mining sectors of both nations. Colombia deeply values Australian innovation and expertise in sectors such as exploration, education, training, land rehabilitation, and many others. This presents great business opportunities for Australian trade and investment in the mining industry.
As of 2018, there are almost 70 active oil contracts in Peru which include agreements for exploration and operation phases. In September 2010, Australia re-opened its Embassy in Lima, reflecting a commitment to increasing investment and trade with Peru. This nation is bountiful in mineral deposits. It’s the world’s second-biggest producer of silver, third biggest in copper and zinc, fourth biggest in tin and lead, and the sixth biggest in gold. Moreover, this nation presents more opportunities in other sectors. These include oil and gas, water technology, agriculture, equipment, services, infrastructure, and healthcare.
Challenges of Australian Trade in Latin America
While the Australian trade with Latin America is way easier now, it’s not totally impervious to various challenges. It’s true, Latin America has been revamping its economic policies and framework to smoothen the incorporation process. However, there are still complexities you need to consider. Some common problems that Australians may encounter when investing in Latin America include:
- Language barriers
- Cultural differences in regards to business culture and practices
- Legal and financial differences
- Lack of reliable knowledge into the local market
Countries such as Argentina are still recuperating from past protectionism policies that hindered foreign investment. Meanwhile, Colombia and Mexico are still trying to resolve their well-known history of drug trafficking and violence.
Fortunately for Australian investors, Latin America has witnessed substantial improvements over the past years. There has been a significant decrease in poverty, the formation of economic alliances, and reduction of corruption. In addition, the region is home to specialized local industries who provide security services for foreign entrants. These services include security checks, due diligence reports, risk mitigation, and many others. Check them out here.
The Future of Australian Trade with Latin America
Latin America has shown prominent promise with its economy, but its deeply rooted issues don’t resolve themselves overnight. Governments all around the region are now appreciating the benefits of international trade to their people and economy. Such realization enables them to act more responsibly. These improvements make the investment process easier for their respective countries.
The recent statistics don’t lie; there are upsurges in international trade between Latin America and Australia. The sheer scale of Latin America opens doors for investors in an extensive range of sectors, especially mining, agriculture, and infrastructure. Australia can benefit from these industries as well, gaining a competitive advantage over other nations.
If you need more information, just contact Australian experts from Biz Latin Hub. Also, check out the website to see how its services can enhance your business. We wish you the best of luck with your forthcoming investments in Latin America.