Central America: Trade and Investment

Baroness Hooper Excerpts

Monday 19th December 2022 Lords Chamber

Asked by

[Baroness Hooper]

To ask His Majesty’s Government what plans they have to improve trade and investment relations with countries in Central America.

[Baroness Hooper (Con)]

My Lords, this is a short debate but an important one as it is the first to be focused on central America for a very long time—and that is not for want of trying. I am happy to have the opportunity this evening and most grateful to all those participating in the debate, as well as to those sufficiently interested to have remained in the Chamber to listen. I welcome our relatively new Minister to his first outing on Latin America. I hope—indeed, I will make sure—that it will be the first of many. I declare interests as a former president and now vice-president of Canning House, as president of the Central America Business Council, part of the Caribbean Council, and as current vice-chairman of the Latin America and Central America All-Party Parliamentary Groups.

My intentions in asking this Question for Short Debate are: to draw attention to this important and dynamic region of the world, where we have historic as well as current links on which to build; to emphasise some of the opportunities for trade and investment in the region for UK entrepreneurs, given that the balance of trade is not in our favour at the moment; and to refer to my role as trade envoy to Panama, Costa Rica and the Dominican Republic, which have been identified as target countries within the region by the Department for International Trade.

I was shocked recently to hear from the British Chambers of Commerce that only 10% of British companies export their products. I believe, therefore, that we should be working hard to encourage small and medium-sized enterprises in particular. I feel that they would find it easier to take their first steps in a relatively small country.

Central America as a region consists of seven countries: Guatemala, Belize—which, of course, is also a Commonwealth member—Honduras, El Salvador, Nicaragua, Costa Rica and Panama, which, together with the Dominican Republic, have a system of integration known as SICA, of which Guatemala currently holds the pro tempore presidency. Each country may be relatively small in terms of population, but the SICA countries have a combined population of 60.7 million, a substantial market for our exports; and the population is young, dynamic and digitally aware.

I wish to emphasise, however, that, in spite of the integration system and a common language, each country has a very individual sense of identity. A UK-Central America association agreement was signed in January 2021, post Brexit, setting provisions on trade in goods and services, intellectual property and general procurement. It also includes provisions on preferential tariffs, tariff rate quotas, rules of origin and so on, to ensure continuity with the previous European Union agreement.

CABEI, the Central American Bank of Economic Integration, is the banking arm of SICA, based in Tegucigalpa in Honduras. It aims to promote the economic and social integration and development of the region across sectors such as infrastructure, renewable energy, agriculture and commerce, as well as to reduce poverty and inequality. The United Kingdom was invited to become a non-regional member of CABEI, which has recently opened a European office in Madrid. Could my noble friend the Minister tell us what the current relationship is between the UK and CABEI, given the benefits that a strong and vibrant collaboration could bring?

With all that as background, with our embassies in-country at the ready, with the Department for International Trade providing back-up services such as UK Export Finance, British expertise, helplines and roadshows, and with an active trade commissioner based in the wider Latin America region, it seems to me that the stage is set for progress, especially in priority sectors such as education—edtech in particular—infrastructure such as airports, roads and water treatment, and services, where I want to highlight the issue of green finance.

In saying that, I appreciate that central American countries are still recovering from the consequences of the Covid pandemic, just as we are, while natural disasters, increased by climate change, have taken their toll; for example, in Honduras. I appreciate also, and I understand that others may speak to these, the issues that have to be faced, such as human rights abuses, violence and corruption, which certainly exist in some of these countries.

In the few minutes that I have left, I shall touch on the three countries for which I act as trade envoy, and which I visited in that capacity in May this year. Happily, I had been to them all previously, which has been an advantage. I shall start with Costa Rica. When we think of Costa Rica, we may think of delicious pineapples and other tropical fruits, and even coffee, but very few realise that medical devices are Costa Rica’s main export, or that AstraZeneca recently opened its splendid regional headquarters in San José, the capital.

We may also think of Costa Rica in terms of ecotourism, without realising that Costa Rica’s green credentials extend to an exemplary reforestation programme and that it won the first Duke of Cambridge Earthshot award in the “protect and restore nature” category last year. The support from its then President—incidentally, a former Chevening scholar—for COP 26 was very much welcomed by this country, especially my right honourable friend Alok Sharma, so British companies would be pushing at an open door in the whole environmental field, especially perhaps in the area of green finance.

In Panama, where many major British firms are already established in the free zone area, I was able to sign a memorandum of understanding with the Foreign Minister on clean and sustainable growth. We had fascinating meetings between the Panama Canal Authority and British companies about the recycling of freshwater in the canal locks, and other technical matters that we hope will lead to further collaboration. Education, particularly edtech, is also a top priority in Panama.

I must mention Buddi, a British invention that was originally a wristband to monitor elderly people but is now established in El Salvador by its inventor as an electronic monitoring device in prisons, and looks set fair as a project to be taken up now in Panama. In relation to Panama, perhaps the Government could also be persuaded to support the Panamanian candidate to be secretary-general of the International Maritime Organization here in London, as a new appointment is about to materialise.

Last but by no means least, I refer to the Dominican Republic, the fastest-growing economy in the region. Last month saw the eighth Dominican Republic Week in the UK, when the largest, most senior and most diverse delegation of business leaders and investors came to London and Edinburgh to forge new, and enhance existing, links—a most successful event. Again, there are huge possibilities in the education sector and in infrastructure projects, especially water treatment, while we have much to learn about the successful management of free zones from the Dominican Republic.

I understand that we have slightly more time than originally anticipated so there are two unexpected facts that I wish to mention. The first is that I discovered that more mozzarella cheese is imported into the Dominican Republic from the United Kingdom than from Italy. Think of that.

Secondly, a meeting with the Minister of Industry and Commerce revealed the problem, caused by climate change, of the sargassum seaweed that is invading the Caribbean, fouling the beautiful beaches and having a major impact on the thriving tourist industry in the Dominican Republic and elsewhere. Upon inquiry, I learned that both the National Oceanography Centre at Southampton University and Exeter University are working on this issue, and that a plan is under way to take a group of British experts and companies to the Dominican Republic to discuss ways of solving the problem and perhaps recycling this noxious weed for energy, cardboard and other useful purposes.

My time is up. I wish to say simply that much has been achieved and, if the Government could now free up the visa requirements affecting those countries and encourage more direct flights, we could be well on the way to doubling that 10% figure for companies exporting to central America.

--- Later in debate ---

[Lord Brennan (Non-Afl)]

My Lords, respecting the time constraints in the gap, I have three broad points to make. The first is on the need for international trade and investment for this country. Increasing trade is of the highest importance generally and in the dire economic circumstances that we are in in the moment—and, particularly, because of our Brexit responsibilities. Secondly, as part of this, surely, we should co-operate with international development banks which cover regions. They have the experience, the money and the will—CABEI in central America in particular.

Next, let us do something about it. In August 2021, the then CEO of UK Export Finance, Louis Taylor, signed an understanding with CABEI to co-operate—well over a year ago. He chose to describe it as a robust means of co-operation. What has happened, and what is going to happen this coming year, 2023?

Lastly, surely, we should co-operate with the areas in which we have long-term interests. Belize is a central American country that is a member of the Commonwealth, and it would welcome our participation. After Australia and India—one through complications and the other through delay—let us see action, if not this day, then at least this coming year. Central America and the Panama Canal is a centre of world focus economically. We should be there with them.

[Baroness Hooper (Con)]

I am told that I am remiss in not having declared my interest as a trade envoy in Panama, Costa Rica and the Dominican Republic. I thought that I had made it quite clear—but if it is necessary, I hereby declare an interest.