Broader hori­zons lead to op­por­tu­ni­ties

Could a no­table ex­port in­crease to Latin Amer­ica be a pre­cur­sor for greater trade with the de­vel­op­ing re­gion?

Kathimerini English - - Front Page - BY NICK MALKOUTZIS

ANALYSIS There is noth­ing like be­ing at a port if you want to broaden your hori­zons. Star­ing out across the sea, ob­serv­ing the cargo and peo­ple travers­ing the wa­ter, it be­comes much eas­ier to en­vis­age the ways in which gov­ern­ments, busi­nesses and in­di­vid­u­als can con­nect through trade. The ships dock­ing and de­part­ing re­sem­ble bees car­ry­ing the pollen to the hive. But apart from goods, they are trans­port­ing the ideas that help cre­ate cross-pol­li­na­tion be­tween coun­tries, nur­tur­ing en­trepreneur­ship and stronger ties.

There could have been no more ap­pro­pri­ate a set­ting, there­fore, than Pi­raeus last Mon­day for a con­fer­ence aimed at fos­ter­ing a dis­cus­sion about how Greece’s largest port can con­trib­ute to growth op­por­tu­ni­ties for the coun­try. Pi­raeus is al­ready the sub­ject of ma­jor for­eign in­vest­ment thanks to Chi­nese gi­ant Cosco and the ship­ping firm has plans to keep ex­pand­ing its pres­ence and the role of the port.

The key question ad­dressed dur­ing the con­fer­ence, which was jointly or­ga­nized by the Pi­raeus Cham­ber of Com­merce and In­dus­try (PCCI) and the Nice-based In­ter­na­tional Cen­ter for Euro­pean Stud­ies (CIFE), was how Pi­raeus – and the spirit of en­trepreneur­ship it em­bod­ies – could be­come a con­duit for eco­nomic growth in Greece.

The po­ten­tial for trade with China is al­ready well-es­tab­lished, and was re­cently ex­am­ined in this col­umn, thanks to Bei­jing’s “One Belt, One Road” strat­egy to cre­ate new trade routes for Chi­nese goods, with Pi­raeus be­com­ing an in­creas­ingly sig­nif­i­cant hub in this process. An area of the world that is not so much at the fore­front of Greek think­ing when it comes to trad­ing and in­vest­ment op­por­tu­ni­ties is Latin Amer­ica.

Five am­bas­sadors – from Mex­ico, Peru, Chile, Uruguay and Ar­gentina – took part in last Mon­day’s dis­cus­sion with the aim of iden­ti­fy­ing ar­eas of po­ten­tial co­op­er­a­tion. Their case was strength­ened by the fact that Latin Amer­ica, es­pe­cially the coun­tries in question, has grown in im­por­tance as a trad­ing part­ner for Greece.

Greek ex­ports to the five coun­tries in­creased by 23.3 per­cent in 2015, ac­cord­ing to Greek For­eign Min­istry data. This in­cludes a 30.3 per­cent in­crease in the case of Mex­ico and a 21.3 per­cent rise in Ar­gentina, where ce­ment and to­bacco make up al­most half of Greek ex­ports. Over­all, the to­tal value of ex­ports to the five Latin Amer­i­can coun­tries may not seem like a lot (214 mil­lion eu­ros) but its up­ward tra­jec­tory at a time when Greek ex­ports have been drop­ping for months on end can­not be ig­nored. Last year the value of ex­ports from Greece to Mex­ico, Peru, Chile, Uruguay and Ar­gentina rep­re­sented 0.83 per­cent of the to­tal, com­pared to 0.64 a year ear­lier.

Also last year, there was a 6.3 per­cent in­crease in the num­ber of vis­i­tors from Ar­gentina, which along with Mex­ico ac­counted for more than 50,000 vis­i­tors to Greece dur­ing 2015. An­other 46,050 came from other Latin Amer­i­can coun­tries. It is clear, though, that in terms of trade, in­vest­ments and tourism, there is the po­ten­tial for much greater achieve­ments.

“Dur­ing re­cent years, Greek busi­ness­men have shown a re­newed in­ter­est in Mex­ico, mainly due to the diver­si­fi­ca­tion and out­wards look­ing process that the Greek econ­omy is cur­rently un­der­go­ing,” the Mex­i­can Am­bas­sador to Greece, Tar­ci­sio Navar­rete Montes de Oca, Kathimerini English Edi­tion.

“We warmly wel­come this in­ter­est and we en­cour­age it. Last year the Greek-Latin Amer­i­can Busi­ness Coun­cil or­ga­nized a very suc­cess­ful busi­ness mis­sion of Greek en­trepreneurs to Latin Amer­ica (Ar­gentina, Brazil, Mex­ico and Peru). In 2017, a new trip may take place, fo­cus­ing on the strate­gic con­tacts al­ready es­tab­lished.”

Glob­ally, Latin Amer­ica is be­com­ing an in­creas­ingly sig­nif­i­cant area for trade and is de­mand­ing greater at­ten­tion from Greek ex­porters dur­ing a pe­riod when tra­di­tional mar­kets, such as the eu­ro­zone, are strug­gling eco­nom­i­cally. In 2000, bi­lat­eral trade be­tween China and Latin Amer­ica was worth $12 bil­lion but by 2013, that fig­ure had risen to $289 bil­lion. Last year China pledged to in­vest $250 bil­lion in Latin Amer­ica in the next decade, while Chi­nese com­pa­nies in­vested a to­tal of $41.8 bil­lion in in­fra­struc­ture there from 2013 to 2015. Mean­while, the mid­dle class in many Latin Amer­i­can coun­tries is ex­pand­ing and the use of tech­nol­ogy is spread­ing.

“Mex­ico is a coun­try open to the world, with 45 free trade agree­ments al­ready signed,” said Am­bas­sador Navar­rete. “We are lead­ers in key sec­tors such as aero­space, au­to­mo­tive, med­i­cal de­vices and elec­tron­ics. Fur­ther­more, our coun­try en­joys macroe­co­nomic and po­lit­i­cal sta­bil­ity, low in­fla­tion, strate­gic lo­ca­tion, ex­cel­lent sup­ply chains and a tal­ented, com­pet­i­tive and young work­force.”

There are in­di­ca­tions that Greece’s de­ci­sion makers are grad­u­ally re­al­iz­ing the sig­nif­i­cance of Latin Amer­ica for fu­ture trade and in­vest­ment. Last year, Greece ob­tained ob­server sta­tus at the Pa­cific Al­liance, a trade bloc cre­ated by Chile, Colom­bia, Mex­ico and Peru in 2011, com­pris­ing a to­tal pop­u­la­tion of 214 mil­lion, an told ac­cu­mu­lated gross do­mes­tic prod­uct equal to the eighth largest econ­omy in the world and an aver­age growth rate of 3.8 per­cent last year.

“It is a free trade bloc and, there­fore, if a Greek prod­uct en­ters Mex­ico it can po­ten­tially reach all the con­sumers of the Pa­cific Al­liance,” said Navar­rete. “Be­sides, the Pa­cific Al­liance is an im­por­tant plat­form for Greece, as ob­server mem­ber state, to be con­nected with the rest of the world, es­pe­cially with China and all the Asian re­gion.”

How­ever, this is not just one-way traf­fic. It is not sim­ply about the goods that Greece can sell to grow­ing Latin Amer­i­can economies but also what growth-in­duc­ing ideas it can pick up from them, as well as at­tract­ing in­ter­est from in­vestors in those coun­tries who are in­creas­ingly broad­en­ing their reach.

Chile, for in­stance, al­lows for­eign in­vestors to sign an agree­ment that will keep their tax rate sta­ble for 10 years. It also per­mits the tax-free repa­tri­a­tion of cap­i­tal equal to the value of the in­vest­ment that has been made by for­eign in­vestors in Chile.

As for Latin Amer­i­cans in­vest­ing in Greece and trans­fer­ring their know-how, Am­bas­sador Navar­rete be­lieves that the tourism sec­tor of­fers the po­ten­tial for such a re­la­tion­ship to blos­som.

“The in­ter­est of the Mex­i­can busi­ness­men in Greece is mainly fo­cused on tourism and tourism-re­lated sec­tors,” he said. “We be­lieve this is a po­ten­tial area of eco­nomic co­op­er­a­tion that can be fur­ther de­vel­oped for the ben­e­fit of both coun­tries. Mex­ico was the ninth world­wide touris­tic des­ti­na­tion in 2015, with ar­rivals ac­count­ing for 32.1 mil­lion for­eign tourists.”

Per­haps these are all signs that in its search for growth and in­vest­ment op­por­tu­ni­ties, the time has come for Greece to look fur­ther afield, to broaden its hori­zons.

Latin Amer­ica is be­com­ing an in­creas­ingly sig­nif­i­cant area for trade and is de­mand­ing greater at­ten­tion from Greek ex­porters.

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