A Canal to the Gulf states

Last week, I traveled to a canal—to talk about a gulf. Two gulfs, actually. One is the Arabian Gulf. The other is the gap that exists between the diminutive nature of trade between Gulf countries and Latin America and the Caribbean and the vast potential for that trade to grow.

Last year, trade between the regions totaled $16.3 billion. To put that in context, that’s just 7% of the trade between Latin America and the Caribbean and the European Union. The figure appears even more striking alongside this fact: at least half of the top 10 exports from each of our regions rank among the top 10 imports from the other region, and vice versa. Clearly, there’s an untapped opportunity here and, as I’ve recently written, tremendous potential for growth.

The setting for this year’s Global Business Forum Latin America, where I spoke about these gulfs, gave us a perfect geographical metaphor for discussing ways to improve trade. Hosted by the government of Panama, we weren’t far from the famous waterway that bears the country’s name. What better symbol to inspire us to create better connections between our regions?

The event, organized by the Dubai Chamber of Commerce and the IDB, left me with a real sense of optimism. Here’s why: When I see Latin American and Caribbean heads of state and business leaders sitting down with counterparts from the Arabian Gulf—alongside some of our Bank’s top experts—to explore new trade possibilities, it seems like just a matter of time before these conversations bear fruit.

Speaking of fruit, Colombia is already shipping it to the Gulf and Peru is meeting rising Arabian demand for pomegranates. But as my colleague Fabrizio Opertti has noted, we should expand trade beyond food and oil.

Our two regions can take specific steps to increase trade, as described in this new IDB report. For example, the evidence indicates that simply by setting up a diplomatic mission in a Gulf state, a Latin American country can expect to increase bilateral trade by 20%. At present, we do not have a single preferential trade agreement between countries in our region and the Gulf states. But if Brazil, for instance, signed one with Gulf Cooperation Council countries, our study estimates that its annual trade with them could jump to $14.6 billion from $9.1 billion.

We could also benefit from more direct flights between our regions. More flights would make it easier for our people to mingle, explore opportunities and get to know each other better.

Last week, the IDB and the Dubai Chamber of Commerce took an important step in that direction. We had more than 850 people from 40 countries at our forum, representing both governments and the private sector. Some 19 investment promotion agencies from Latin America and the Caribbean hosted hundreds of meetings matching potential business partners.  These leaders discovered new suppliers and exciting markets.

Now, it’s up to us to build on that momentum and continue to establish new ties—to build new canals, if you will—to reduce the gulf between us.