December 2014.- LATAM stands for Latin America and is made up of 20 countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, México, Nicaragua, Panamá, Paraguay, Peru, Uruguay and Venezuela. This huge area covers almost 13% of the earth’s surface and is home to almost 9% of the world’s population.
Trade and investment between Spain and LATAM area
Latin America and Spain have much in common, not only history, but also in terms of language, culture and shared economic interests. Speaking the same language has also facilitated trade relations between the two.
In 2013, Spanish exports to LATAM came to €15,004m, 6.5 % of total exports. Imports represented, €18,105m, 7.5 % of total imports.
Catalonia plays an important role in this trade flow between Spain and LATAM countries. If we take the 2009-2013 average, 27.7% of Spanish exports to LATAM countries came from Catalonia and 18.2% of Spanish imports from the LATAM area go to Catalonia.
In terms of investment, Portugal and Spain account for more than half of Latin American investment in Europe (ICEX, Spain, platform for the investments and headquarters of multilatin companies in Europe, Africa and the Middle East, 2014).
In 2013 LATAM investment in Spain came to €5,586m and Spanish investment in LATAM (ETVE and non-ETVE) came to €1,829m.
If we consider the period 2009-2013, 9.1% of Spanish Investments to the LATAM region come from Catalonia. Investments of 10.1% from the LATAM region go to Catalonia. However, the foreign investment figures are more erratic than those of the foreign trade: there are years when Catalonia accounts for 3% (2012) and years when it increases to 18% (2013).
Trade and Investment between Catalonia and LATAM area
Catalonia’s main market is Europe, 63% of exports and 52% of imports in 2013. However, in 2013, Catalonia exported €3,955m to LATAM countries, €1,000m more than 2010 and showed imports to a value of €2,552m. Catalonia has a trade surplus with LATAM that has grown over recent years, increasing exports slightly and reducing imports in 2013.
If we look at average figures for the years 2009-2013, 6.1% of total Catalan exports go to the LATAM region and 4% of total Catalan imports come from the LATAM area.
Main exporting sectors from Catalonia to LATAM region are: machinery and medical appliances, vehicles other than railway, electrical machinery and equipment, pharmaceutical products, plastics, and organic chemicals.
Main importing sectors from Catalonia to LATAM region are: oil seeds and fruits, mineral fuels, edible fruit and nuts, coffee tea and spices, cereals.
As for FDI, againg with average figures for the years 2009-2013, Catalonia consistently shows a deficit in terms of FDI with respect to the LATAM region: 21.2% of total FDI inflows to Catalonia come from the LATAM region and 8.8% of total FDI outflows from Catalonia go to the LATAM region.
Trade between Catalonia and LATAM (Datacomex, MEURO)
FDI flows between Catalonia and LATAM (Datacomex, MEURO)
According to a survey of Catalan companies abroad (Invest in Catalonia-ACCIÓ) there are 970 Catalan companies in the LATAM region, and Mexico, Brazil and Argentina are home to more than two thirds of all companies. The number of LATAM companies in Catalonia is lower (83) and again Mexico, Brazil and Argentina, as well as Chile, lead the ranking. Examples of Latin American firms that have invested in Catalonia are Cemex, Arochi, Marroquín & Lindner, Brandigital, Grupo Bimbo, Banco Pichincha, I-Sol.
Number of Catalan companies in LATAM countries:
- Mexico: 337
- Brazil: 187
- Argentina: 139
- Chile: 97
- Colombia: 54
- Panama: 29
- Peru: 27
- Dominican Republic: 23
- Uruguay: 19
- Venezuela: 19
Number of LATAM companies in Catalonia:
- Mexico: 17
- Brazil: 17
- Argentina: 9
- Chile: 8
- Panama: 8
- Uruguay: 7
- Colombia: 5
- Costa Rica: 5
- Venezuela: 2
- Paraguay: 2
Why is Catalonia an ideal place for multinational companies with economic interests in Latin America? Why should international firms invest in Catalonia in order to provide and make business with LATAM area?
Catalonia is an ideal launching pad for entering Latin American markets, home to up to 600 million potential customers.
- It shares historical and cultural bonds with Latin America. Barcelona has excellent communications and connections in general with the area, and especially with some LATAM cities such as Bogotá, Buenos Aires or Sao Paulo.
- It has double taxation agreements with 18 LATAM countries, more than other European country, to promote and protect reciprocal investments. This helps simplify the situation of companies and individuals that have fiscal dealings in both countries. Those countries are: Argentina, Bolivia, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panamá, Paraguay, Peru, Uruguay and Venezuela.
- It has an attractive holding tax regime for ETVE, there are specific and unique tax advantages provided in some of the Tax Treaties signed.