I have today launched a new report by my Department: Investing in Latin American Growth: Unlocking Business Opportunities in Brazil, Mexico, Argentina and Chile.  This is the first report produced by DFAT's Economic Analytical Unit, part of the East Asia Analytical Unit.

In the past few years, Brazil, Mexico, Argentina and Chile have led Latin American economic reforms.  They have reduced trade barriers and opened up almost completely to foreign direct investment.  More than 130 Australian companies now operate in these four economies with around A$7.4 billion of investment.

The Economic Analytical Unit report concludes that the major challenges facing Australian business in Latin America are regional trade and investment agreements combined with the growing commercial influence of the United States and European Union.

Regional free trade arrangements and in particular, the prospect of a Free Trade Area of the Americas, underscore the need for Australia to negotiate a bilateral free trade agreement with the United States.  Such an agreement would deliver economic benefits of up to A$19 billion over 20 years and help protect and promote Australia's annual A$2.5 billion in agricultural exports to America.

The report also highlights lessons Latin America and East Asia have for each other and for Australia.

The Latin American experience of prolonged weakness in bank lending to the private sector tells us that East Asian Governments must work to reduce debt, uphold creditors' rights in court, enforce corporate restructuring and, where necessary, enforce bankruptcy.  Without these measures, East Asian credit cultures may be damaged in the long term, banks may remain unwilling to lend to the private sector and future growth would suffer.

Tough decisions being taken in Argentina to deal with the country's current crisis, including restricting public spending to actual revenue on a monthly basis, are commended in the report.