GCC-Latin American integration potential has just risen

The Ukraine and Gaza wars have weakened the international system, devaluing international laws and customs and paralyzing important multilateral institutions, including the UN Security Council. This state of affairs has spilled over into economic relations. There are now multiple undeclared trade wars between key economic players, such as the US, China and the EU.

President Donald Trump’s policy of economic nationalism, including proposing high tariffs on Canada and Mexico and restrictions on trade and investment, is leading some of America’s neighbors to explore other options.

Since 2005, the Gulf Cooperation Council has tried to grow trade and investment relations with Latin American and Caribbean countries, with only limited success. When this process started almost two decades ago, there was little connectivity between the two regions — no direct air flights or shipping routes. Trade and investment were negligible. Now, that has changed, with direct flights from Gulf hubs to a few Latin American cities and direct shipping on the rise. There are important investment partnerships and two-way trade has increased eightfold, reaching about $20 billion.

However, the full potential of the two regions’ integration has yet to be realized. Taking Latin America, the GCC and the rest of the Arab world together, they have a combined gross domestic product of close to $10 trillion, more than 1 billion inhabitants and many shared historical and cultural connections. There are countless opportunities to grow mutually beneficial partnerships between the two regions, politically, economically and culturally.

Now is a good time to realize some of those opportunities. Although trade between them is growing, it accounts for less than 0.2 percent of the two regions’ GDP. Trade is focused mainly on ties between the GCC and Brazil thanks, in great measure, to the initiatives of President Luiz Inacio Lula da Silva, starting with his May 2005 hosting of the first ever Arab-South American Summit in Brasilia. This was followed by high-level visits, conferences and trade exhibits, which resulted in the establishment of those trade and political ties.

A GCC-MERCOSUR agreement and trade negotiations soon followed, as well as general agreements and contacts with individual countries, such as Peru, Mexico, Argentina and Chile, and groups such as the Community of Latin American and Caribbean States and the Association of Caribbean States. However, other than growing economic ties with Brazil, the results have been modest.

The current breakdown in the global political system, trade wars and the increasingly inward-looking US policies are encouraging countries and groups of states to seek regional and bloc-to-bloc engagement. In a recent GCC-Latin American forum involving officials and experts, participants discussed a number of levers to integrate the two regions.

There are three main areas that will be essential to sustainable integration: political dialogue, trade and investment, and tourism and people-to-people engagement.

Strategic dialogue is essential to guide this integration process and focus on the strategic imperatives of this important relationship. President Lula’s vision in 2005 was instrumental in bringing the two regions together. Sustained strategic dialogue at all levels — heads of state and government, ministers, senior officials and experts — will be needed to heighten interest.

It is also essential to scale up the areas of interest and potential benefits from the two regions’ integration. For example, this dialogue could include creating political partnerships to deal with geopolitical challenges, especially the increasing global polarization and growing security threats, such as terrorism and drug trafficking.

Studies have shown that useful economic partnerships are plentiful. The GCC, the Inter-American Development Bank, consulting companies and independent think tanks have identified great opportunities in both regions. What is needed is a regular trade and investment dialogue to help realize them, by sharing information and easing trading restrictions to create a more hospitable environment for traders and investors.

This dialogue needs to take place on both the public and private levels. Business-to-business discussions would identify business opportunities and desired partnerships, while official meetings will be needed to remove any trade or investment barriers and adopt any changes needed to make the two-way trade and investment more attractive.

For example, over the past 20 years, transportation links have grown significantly between the GCC countries and a few Latin American countries, but that needs to be extended to more countries in Latin America and especially the Caribbean, where connectivity is still a challenge. Investment in infrastructure is one of those opportunities, whereby companies from both regions could work together to build badly needed transportation hubs, roads, airports and seaports.

In addition to more flights, there is an urgent need to explore visa-free travel and eased visa procedures between the two regions.

Dr. Abdel Aziz Aluwaisheg

People-to-people engagement has improved after the start of direct flights between the two regions, but those are still limited in number. In addition to more flights, there is an urgent need to explore visa-free travel and eased visa procedures between the two regions, or at least between countries that are ready to do so. This would boost both business ties and tourism.

There have been numerous cultural exchanges in recent years, but with thriving arts scenes in both regions and a long shared history and culture between them, there is an opportunity to do more. Easier visa procedures and additional funding will be needed and those are within reach if there is more engagement on the other pillars — the strategic and the economic.

One challenge that has hampered efforts to integrate the two regions is the weak institutional structure that could underpin this process and make it sustainable. For example, when Lula left office in 2011, the growing engagement at the time suffered tremendously. Changes in leadership in some Latin American countries and the occasional ruptures have also left an impact. Establishing a solid institutional structure would sustain the integration process over time and any possible rough patches. The GCC is ready to engage and is currently exploring potential partners to provide such institutional structure.

• Dr. Abdel Aziz Aluwaisheg is the Gulf Cooperation Council assistant secretary-general for political affairs and negotiation. The views expressed here are personal and do not necessarily represent the GCC. X: @abuhamad1