HELLO FROM THE OTHER SIDE

Dubai 2017 | DIPLOMACY | FOCUS: DUBAI-LATAM RELATIONS

Connectivity is key to facilitating trade, and the sizable potential for trade with Latin America has justified investment in logistics from the UAE. As the markets for consumer goods grow, growth in trade between the two is expected to expand in the years to come.

Dubai is known as an exporter of politically unattached capital, seeking out markets that require key infrastructure and bringing their expertise in developing it. Over the past decade, countries in Latin America have been receiving fixed-capital investment from the UAE in an attempt to develop connectivity.
At the same time, Latin American countries are increasingly courting the UAE as a market for its consumer goods. In fact, Brazil is the main commercial partner of the UAE, with the country representing 67% of total trade with Latin-American countries; the import of sugar cane from Brazil was worth a total USD1.9 billion in 2015. In light of the Emirates' ability to maintain its commercial attractiveness in spite of hefty oil price slumps, Dubai stands as a secure business destination.

The UAE's non-oil trade with the region was USD2.5 billion in 2016, according to Dubai Customs. Comparatively, trade with Asia accounted for USD159 billion and North America dwarfed that figure with USD19.9 billion.

The relatively high levels of collaboration and the proliferation of free trade agreements among South American states is one of the draws. Likewise, the level of infrastructure is another attraction. The Paraguay-Paraná inland waterway, for example, connects landlocked Paraguay to the Amazonian parts of Brazil, Bolivia, Argentina, and Uruguay. Currently, the waterway sees around 20 million tons of traffic a year. Seeing as the region is producing so much of the food and other products that are consumed in the UAE, the potential to explore trade opportunities is being realized.

DP World has seen the potential to develop the logistics sector in South America, and the company now operates ports in Peru, Argentina, and Brazil. The middle of 2016 saw DP world pen a deal for a 50-year concession in Ecuador, the total USD1 billion investment will develop the greenfield port at Posorja primarily for container volumes, and intends to reach a capacity of 750,000TEU per annum in 2019. Brick and mortar investments do not scare Dubai's leading public and private companies, who have a long history in greenfield projects across the globe. Ultimately, Dubai's plethora of investors need destinations for their capital.
Dubai's carrier, Emirates, already has non-stop flights to Argentina and Brazil but has postponed plans to establish a direct flight to Panama, originally scheduled for February 1, 2016. The feat would have been a record of 17 hours and 35 minutes flying time. The trip would have been a total 8,590 miles, using Boeing's 777-200LR, the longest-range jet.

Investing in connectivity and logistics infrastructure benefits the UAE by shortening the time it takes for South American goods to reach the Emirates. For example, an Emirate's flight to South America would be able to carry 15 tons of goods per trip, a conservative three flights a week would add almost 2,500 tons capacity per annum. The UAE imports the majority of its food, and in 2016 imported 33.74 million tons of food products. In 2016, a total of 351,000 shipments made it to the UAE via land, sea, and air—and less than 8,000 of these were for reshipment.

The desire for partnerships are not just about securing food imports, but also about sharing knowledge. Costa Rica, for example, produces 99% of its energy consumption through renewable resources. The UAE, in its campaign for a knowledge-driven economy is keen to enter into expertise sharing partnerships to help cultivate a more sustainable economic infrastructure.