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‘The effect of Brexit on trade partnerships with Latin America shouldn’t be underestimated’

In the 17th century, John Donne memorably wrote that ‘No man is an island’. Isolationism is not an option in the 21st century either however; no country can shield itself from the effects of the global interconnectedness, whether it’s regarding climate change, transnational organised crime, cyber threats, or movements of migrants and refugees.

Those who claim they can turn back the clock to some golden age of yore do not understand the nature of globalisation today. Nor the serious economic and geopolitical consequences that come with trying to roll it back.

As a Mexican who grew up and was schooled as a young boy in Wales – and believes in the compelling story, vision and narrative of an internationalist, Europeanist, open and cosmopolitan Britain – I was dismayed by the siren calls of Brexit, and those we believe that the UK can return to a past of ‘splendid isolation.’

The referendum, beyond the own-goal scored against British strategic interests and the ability of the nation to continue to ‘punch above its weight’ in global affairs, entails a number of risks for the world, beyond Europe.

The vote certainly comes at a time of worldwide uncertainty. Political figures are challenging the very nature of alliances and the value immigration has in terms of fostering economic vitality, wellbeing and entrepreneurship, as well as the fundamental notion that it behoves us all to live in an international rules-based system.

In the short run, Latin American has suffered – and most likely will continue to suffer – instability in international financial markets and a rising dollar, following the referendum. It may also confront a potential drop of Foreign Direct Investment (FDI).

In the medium term, though, everything seems to suggest that markets will tend to stabilize and that the negative impacts of Brexit will be limited.

The latest IMF projections point in this direction also: as a result of the referendum in the UK, estimates of economic growth for the majority of regions and countries – with the exception of Latin America – have been revised downwards for 2016 and 2017.

This reflects, among other things, the low profile and footprint that the UK has in Latin America’s economies.

Britain was, until the middle of last century, a crucial economic partner for the region. Currently, however, the major trading partners in Latin America are the United States, the Netherlands, Spain, and China.

Trade with the UK only accounts for 0.65% of total Latin American exports. Something similar happens with Foreign Direct Investment since British capital flows are small in most countries.

Nonetheless, Brexit may still affect the region indirectly to the extent that it hampers the recovery of the global economy, weakens international trade and extends longer the uncertainty of currency markets and financial securities.

Moreover, Brexit will also require a reconfiguration of existing trade treaties.

By invoking Article 50 of the Lisbon Treaty, the UK would be excluded from the free trade agreements that the European Union shares with Chile, Colombia, Central America, Mexico and Peru, and would therefore no longer have trade agreements with any Latin American country.

Negotiating new bilateral treaties would be a headache for the UK, though it would certainly entail a proverbial silver lining by opening the possibility of reaching 21st century, 3.0 trade agreements more in line with the prevalent economic and trade circumstances of today.

But the greatest loss would be in regard to the Transatlantic Trade and Investment Partnership. TTIP negotiations might well be on the ropes without London’s participation, for one. For those of us who believe in the huge potential of a truly northern Transatlantic free-trade zone binding Europe and North America this would be an unmitigated disaster.

One could also argue that at a moment when some Latin American nations are moving forward finding new, innovative, à la carte, incremental, practical, and geostrategic models of sub-regional cooperation (such as 2011-minted Pacific Alliance between Mexico, Peru, Chile, and Colombia) the U.K. seems to have moved backwards.

In a post-factual European and U.S. political environment, Brexit might be interpreted as proof of the failure of regional integration models, leading to a return to protectionist rhetoric and navel-gazing doctrines of isolation not only in Europe but also in Latin America. The dark forces of history – nationalism, fragmentation, demagoguery, and xenophobia – particularly in Europe but also potentially in the US, might simply skyrocket.

And the Pacific Alliance nations underscore how these nations are more than just another BRIC in the wall when it comes to openness to trade and globalisation.

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