The EU’s 45 Billion Opportunity for Latin America
The recent announcement by the European Union to invest 45 billion euros in Latin America and the Caribbean (LAC) through the Global Gateway scheme is potentially a monumental milestone in the EU-LAC relationship. This substantial commitment carries far-reaching implications for both LAC governments and businesses operating in or looking to expand within the region.
Beyond the financial aspect, the EU’s commitment underscores its dedication to the LAC region in the face of growing Chinese influence. China has significantly expanded its presence in LAC countries over the past two decades, making it a crucial trade partner. However, the EU’s substantial investment signals its intent to remain the region’s foremost investor. In fact, this investment surpasses the USD 2.4 billion in foreign assistance requested for Latin America in the Biden administration’s 2023 budget request, underlining its magnitude. This investment comes at a time when the EU is looking to strengthen global partnerships and diversify critical mineral sources. This presents a golden opportunity for LAC governments and companies to establish partnerships with countries that previously had limited presence in the region.
The EU’s plans to revitalize its relations with LAC countries include efforts to secure full ratification for modernized agreements with Chile and Mexico, setting the stage for a new era of economic collaboration. Additionally, the EU aims to create value chains within the LAC region, reducing its dependence on China for mineral supplies and fostering sustainable sourcing alliances. This not only benefits the EU but also opens doors for LAC governments positioning themselves as business hubs and for businesses eager to engage in global value chains, presenting substantial economic growth prospects.
The commitment aligns with LAC countries’ priorities, particularly in addressing climate change and the energy transition. More than 70 percent of Global Gateway projects in LAC focus on issues such as developing minerals like lithium and copper, promoting clean hydrogen, and launching green bonds. This synergy between the EU and LAC on climate action is vital, given the region’s advocacy for ambitious climate policies. Beyond climate, the partnership also covers digital transition, healthcare, food security, and addressing migration, security, governance, and transnational crime. The EU’s investments in these areas will have a profound and tangible impact on the region’s development, with job creation and technological advancement at the forefront.
The EU’s pledge is not merely a financial injection; it’s a resounding vote of confidence in the LAC region. Over the past decade, annual trade between the EU and Latin America surged by 39 percent to reach 369 billion euros (USD414 billion), and EU investment in the Region grew by 45 percent to reach 693 billion euros (USD777 billion). This announcement represents an unprecedented opportunity to strengthen alliances further, foster commercial relationships, and accelerate sustainable development in the LAC region.
Leaders pledged to hold an EU-CELAC summit every two years, with the next gathering scheduled for 2025. A litmus test of its success will be whether the partners manage to finalize the three pending key international agreements (Mercosur, Mexico, and Chile) soon, showcasing the commitment to fostering deeper economic ties.
While there are differences in priorities between Europe and Latin America, such as the situation in Ukraine, shared objectives like the energy transition and climate change create a solid foundation for cooperation. The EU’s pledge is a symbol of not just economic partnership, but also the common goal of addressing global challenges.
To maximize the benefits of this historic commitment, proactive and strategic engagement is crucial. LAC governments and businesses must continue reaching out to counterparts in both public and private sectors to identify opportunities, shape the execution of the investment agenda, and establish mutually beneficial commercial partnerships. The EU’s 45 billion Euro investment could be a transformative force, ushering in a new era of prosperity and collaboration for both Europe and Latin America and the Caribbean. Contact us to discuss further.
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