- Created: Wednesday, 26 April 2017 13:38
Despite US President Trump vowing to change trade agreements with countries in the region, reversing such deals will be difficult in the short-term
Despite growing political uncertainty in key markets such as the US and the UK, companies are making strong bets on Latin America and there are high hopes that M&A activity in the region could pick-up in the final quarter of this year.
José Antonio Morán, chair of North America banking, finance and major projects at Baker McKenzie, highlights Siemens´ projected expansion in Argentina, Repsol increasing its upstream investment in the region, as well as the recent spike in IPOs and sovereign bond issuances, as grounds for optimism.
That said, Morán says the fact the US is preparing to review double taxation treaties with a number of countries creates uncertainty. However, he adds that Latin America is in need of infrastructure investment, so opportunities are still plentiful, especially in Colombia and Paraguay. “Renewable energy projects are attracting attention in Argentina and elsewhere,” he adds.
Despite newly-elected US President Donald Trump having set out plans to change the country’s trade agreements with countries such as Mexico, Morán argues it will be difficult to make alterations to such deals in the short-term. “The platform of the US president includes references to the elimination of trade deals such as NAFTA, taking action against corporations that export jobs to Mexico rather than employ Americans in the US, and measures to control immigration,” he says. “However, NAFTA has been in existence for over 20 years and has changed the way business is conducted in North America – it is not possible to reverse that in the short-term.”
Morán also highlights the fact that Mexico is the third-largest trading partner of the US, as well as being the US’ second-largest export market. “Such economic realities should weigh heavily when considering any changes in trading relationships,” Morán says. He adds that, given the sizeable investments made by US and Canadian companies in Mexico, he does not expect the flow of foreign funding into the country to stop.