The refusal of the Latin America and the Caribbean (LAC) countries to march in lockstep with anti-Russian sanctions was the foundation to a build-up of their trade with Russia. But there are logistics and legal issues handicapping the potential. However, there are both bi- and multilateral tools to address these issues.
Discussion of EAEU – Latin America cooperation prospects has become traditional for the St. Petersburg International Economic Forum. Last year’s participants from LAC countries talked about a “thick investment portfolio” available in the region – of over 480 projects, with a total amount of investments exceeding USD 150 billion. And Latin America relies on Russia’s involvement therein. Russian participants spoke about a mutual interest in trade, food products in the first place.
However, the relations are not up to the mark yet. In 2016, the total trade turnover between Russia and the LAC countries reduced by 9%, amounting to less than USD 12 billion as compared to USD 13.2 billion in 2015.
- In 2016, the volume of trade between Russia and Brazil – the region's largest economy and Russia's BRICS partner – declined by 10.95% as compared to 2015 (a year earlier, the figure reduced by 24%), Russia and Argentina – by 10.53%, Paraguay – 18.74%, Chile – 13.85%, and Venezuela – 12.65%.
- Meanwhile, some LAC countries showed a significant rise in trade turnover. It went up by 8.03% with Mexico (LAC’s second largest economy in Russia's foreign trade mix), almost tripled with Trinidad and Tobago (by more than USD 480 million), almost doubled with Cuba – by USD 126 million), and with Puerto Rico grew by 35.89%.
Major obstacles to more active trade are of technical and organisational nature.
- There are logistics problems, e.g. no or insufficient logistics centres or direct flights.
- The legal framework in Russia-LAC bilateral relations is underdeveloped. For example, there are no double taxation treaties.
In the past year, the parties made a number of steps to address these issues.
- On 11 November 2016, a meeting of representatives of the Russian Ministry of Foreign Affairs and leaders of the Community of Latin American and Caribbean States (CELAC) drew up a practical interaction roadmap, with a focus on business dialogue between the parties to promote mutual trade in high value-added goods, growth of tourist arrivals, etc. A double taxation convention was signed with Ecuador.
- In December 2016, at a meeting of the Intergovernmental Russian-Venezuelan Commission, the parties agreed to promote cooperation in pharmaceuticals and natural gas industry, as well as peaceful use of nuclear energy and outer space.
- In February 2017, Vladimir Putin and President of Uruguay Tabare Vasquez adopted a plan of action to expand trade and economic relations. In addition, the Roscongress Foundation and Uruguay XXI Investment and Export Promotion Agency signed a cooperation agreement.
- In the summer of 2017, Moscow expects an official visit of Brazilian President Michel Temer. Brazil is poised to double its volume of agricultural trade from USD 5 billion to USD 10 billion within five years.