Australian Entrepreneurship in Latin America – Growing Commercial Opportunities
Latin America has not traditionally been Australians commercial jurisdiction of choice, with regions such as Asia and Europe taking precedence. However, times are changing, and it seems that there has been a shift in commercial interest towards the large, diverse and often unexploited markets of Latin America.
The growth in commercial ties between the region is evident with the growth of groups/associations such as The Australian Latin American Business Council, The Australia Trade Commision in Latin America and The Council on Australia Latin America Relations (COALAR) showing a push from both public and private sectors for increased relations between the two regions.
Australians have always had a fascination with the Latin American culture, food, language, landscape and history. This has slowly converted into a commercial interest in recent times, an exciting prospect for both Latin Americans and Australians alike.
This article will look at the historical development of Australian-Latin America business ties, and analyse the ways that these have grown in recent years, focusing on the key trade relationships and impressive figures that have characterised the links between the two regions.
A History of Australian-Latin America Relations
Australian Imports from Latin America (2016/17)(AUS Dept. of Foreign Affairs and Trade)
A fascinating book written by historians Barry Carr and John Minns in 2014, entitled “Australia and Latin America: Challenges and Opportunities in the New Millennium”, that speaks about the the historical changes and potential business opportunities between the two regions, opens with the following quote “It is almost as if Latin America has been rediscovered by Australia nearly 200 years after most of the region’s countries declared independence from Spain.“ It is a damningly accurate analysis of the traditional negligence shown by Australia towards a region that has been growing steadily in terms of marketability and ease of investment since the regional fall of dictatorships that occurred in the 70s and 80s. From this point forth, Carr and Minns point to the emergence of a more open and welcoming attitude to foreign investment and international conversation.
Given the geographical distance between the two regions, and the preference on behalf of Australia to the more local Asian economies, Carr and Minns show the stagnant relationship that existed until the turn of the 21st century.
However, the book stresses that in more recent history, there has been a considerable u-turn in outlook between Australia and Latin America with a “booming” investment grid being formed over the last two decades, stating that it will continue to grow and grow. According to Carr and Minns, exports and imports between Australia and Latin America doubled in the period of 2004-2010, with figures for exports reaching an eye-watering US$2,576 billion. Furthermore, the website International Affairs predicts that due to the growing middle class in Latin America, and the remarkable natural resources at hand, minor improvements in relations between the regions would reap significant rewards for Australia; even if it never does become the principal trading partner for Latin American countries.
It appears that Carr and Minns’ predictions were spot on. In 2018, agreements for the Trans-Pacific Partnership (TPP-11), a new trade deal between 11 countries, including Australia, Chile, Peru and Mexico was drafted and signed. This new trade agreement will eliminate 98% of trade tariffs, and foster commercial activity, in a region with a collective GDP of $13.7 trillion. As well as the TPP-11, Australia has secured additional trade deals with Peru in the Peru-Australia Free Trade Agreement (PAFTA).There are currently 90 Australian corporations working in Peru, many drawn to the fantastic mining opportunities available in the country, providing innovation and assistance to local communities, whilst also drawing a healthy profit themselves!
In terms of sheer numbers, Brazil remains Australia’s largest and most dominant partner. Australian imports in 2017 from Brazil were valued at A$904 million, whilst exports valued at A$1.898 million. There are over 100 Australian companies, a quarter of which feature on the ASX200, in Latin America’s largest nation, including giants such as BHP. Trade relations between these two countries were significantly boosted after yet another strategic partnership was signed in 2012.
Source: Biz Latin Hub