Dubai is making major moves to strengthen and diversify trade ties with Latin America.
As part of its $27 million campaign to promote trade ties between Dubai and South America, the Dubai Chamber of Commerce and Industry (DCCI) opened its first representative office on the continent in Brazil in 2017. It has since announced plans to open bases in Argentina and Panama later this year.
Hamad Buamim, the CEO of the DCCI, told delegates at the Global Business Forum on Latin America in February that the funds, which will be spent over a 10-year period, will look to diversify the emirate’s trading relationship with the region into new high-potential sectors. “Food security, logistics and tourism are existing sectors that we can work together on, and there are a number of companies in Latin America that work within the areas of technology and innovation that we have a real appetite for,” he said.
The developing trade relationship between Dubai and Latin America is perhaps best reflected in bilateral trade statistics between the UAE as a whole and Latin America. Trade with Brazil, the UAE’s largest trade partner in the region, expanded by a factor of 10 between 2000 and 2015 to $3 billion. While Mexico, the UAE’s second-largest partner, has posted a 473 percent increase in bilateral flows in the last decade to reach $519 million in 2016.
Imported goods largely stem from the region’s agricultural powerhouses of Brazil, Argentina and Mexico, which contribute significant quantities of the UAE’s beef and poultry, cereals and refined sugar needs. However, trade also extends to higher-value-added goods, such as vehicles, electrical components, machinery and medical goods.
Despite this growing footprint, the region still represents a relatively small partner for the UAE, and accounts for 3 percent of Dubai’s total trade. But the Dubai Multi Commodities Center (DMCC), a government entity tasked with developing the emirate into a leading commodities trading center, aims to push this to 6 percent within three years and into double digits by 2022.
Sentiment among private sector executives may take some time to catch up to the ambitions of government planners. According to the latest OBG Business Barometer: UAE CEO Survey, 30 percent of largely private sector CEOs in the UAE saw MENA as the region with the greatest potential for trade and investment flows, followed by South Asia (22 percent) and East Asia (14 percent). Only 3 percent cited Latin America as the highest-potential region.
Given the already well-established interregional trade in livestock and meat, the halal segment is seen as a niche market with significant upside, and a projected global market value of $6 trillion this year.
The UAE is already home to one of the largest and most well-developed halal markets in the world, ranking second out of 73 countries, behind Malaysia, according to Reuters. It ranked first for halal food, travel, modest fashion, media and recreation, and pharmaceuticals and cosmetics.
According to Salaam Gateway, a global information provider on the halal industry, the UAE imported $354 million worth of live animals and animal products from Brazil, Argentina and Mexico in the first half of 2017, the vast majority (97 percent) of which came from Brazil.
After some prominent Brazilian meatpacking companies were charged with selling unsafe meat products last year, eliciting temporary bans from the EU, China, Saudi Arabia, Egypt and the UAE, the country is eager to repair its global reputation and maintain access to halal markets.
In Brazil, which is one of the world’s largest producers, halal meat accounts for roughly one-quarter of meat exports, and the country is home to three halal certifiers and some 300 halal-certified producers, according to Salaam Gateway. “Most [companies] operate in the beef and chicken sectors, but we increasingly also issue halal certification for ingredients, cosmetics and medicine,” Nizar Ghandour, international relations manager for the Federation of Muslim Associations of Brazil, told industry press.
With the global halal beauty market expected to reach $45 billion by the end of the decade, and the UAE leading the MENA region in per capita spend—at $239 in 2015, according to market researchers—cosmetics could present another promising line of trade for halal-certified producers in Latin America.