For many people in the Caribbean, mentioning the Arabian Gulf is likely to conjure up images of a distant desert.
Meanwhile, for many citizens of Arab countries in the Gulf, thinking of Latin America and the Caribbean may evoke only the names of football players or track stars.
This lack of mutual understanding is especially paradoxical if we consider that, in the 19th and 20th centuries, our region received hundreds of thousands of Arabic-speaking immigrants. Many of them prospered and some of their descendants became leaders in business and politics in our countries.
Yet, these two potentially complementary regions know little about each other and we do little business together. In 2018, the trade of goods and services between Gulf states and Latin America and the Caribbean totaled just USD$16.3 billion.
That is just seven percent of all the trade between Latin America and the Caribbean and Europe, which was about USD$230 billion last year.
To bridge the gaps between these two regions, the Inter-American Development Bank and the Dubai Chamber of Commerce and Industry organized a business forum in Panama City. We expect around 700 business leaders and government officials from both regions to be in attendance.
Our aim for the meeting is for these private and public sector leaders to get to know each other and find mutually beneficial business opportunities.
These opportunities are substantial. In Latin America and the Caribbean, we trade hundreds of products with the rest of the world that we do not trade with Gulf countries.
One example of this is copper. The United Arab Emirates buys USD$1.6 billion of copper each year, while Latin America exports USD$15.5 billion of copper annually. But we do not export even an ounce of that to the UAE.
Another example is airplanes. Brazil exports aircrafts around the world, but not to the Gulf.
The key to increasing trade is for us to get to know each other better. Some Caribbean companies have already found niche markets in the Gulf. According to the IDB’s INTrade database, various Caribbean nations registered generally modest levels of exports to the Gulf nations during the past decade: Trinidad and Tobago exported LNG and cement worth USD$15 million from 2008 to 2010; Jamaica exported tires, domestic appliances, aluminum, and coffee worth USD$200,000 from 2014 to 2017; Guyana exported lumber worth USD$300,000 from 2010 to 2013; Barbados exported pharmaceuticals and radio equipment worth USD$300,000 from 2015 to 2018; and Suriname exported tropical birds worth more than USD$300K from 2014 to 2017.
But we should set our sights even higher. There are two things we could do relatively quickly to nearly double trade between both regions.
First, we should open more embassies. Our estimates at the IDB indicate that simply by having more diplomatic missions we could increase annual trade between the Gulf and Latin America and the Caribbean by USD$3.3 billion.
For evidence of this, we need to look no further than Chile, which opened a business promotion office in Dubai in 2006. Then in 2009, Chile opened an embassy in Dubai. The following year, in 2010, Chilean companies invested a record of almost USD$1.5 billion in the United Arab Emirates.
More recently, in 2017, Chile and the UAE eliminated traveler visa requirements for each other, leading the Dubai-based airline Emirates to begin offering one-stop flights to Santiago. Those flights, which boost tourism, can carry up to 70 tons of cargo every week, opening a new market for perishable products like salmon.
The second thing we should do is to sign more trade agreements. In the nearly 15 years that I have led the IDB, I have often seen how trade agreements boost business and investment. Bilateral investment treaties and double taxation agreements have done a great deal to increase trade between many regions and they could do the same thing for Caribbean countries.
As of today, however, we do not have even a single preferential trade agreement between Gulf states and countries in Latin America and the Caribbean. According to our estimates at the IDB, we could increase trade by about USD$9.8 billion annually simply by having such agreements in place.
Of course, we should not limit ourselves to opening offices and signing treaties. We should also lower logistical costs that curb commerce.
On average, it takes between three and four days for a container to clear customs at ports in both of our regions. In Germany, it takes just one day.
Many of the countries in the Gulf and in Latin America and the Caribbean are moving to streamline trade and investment, but we have a lot of work ahead of us.
We are in the early stages of our relationship with the Gulf and we have a great opportunity to improve it by taking these concrete steps and getting to know each other better.
Let’s seize that opportunity.
• Luis Alberto Moreno is the president of the Inter-American Development Bank.