EU-LAC trade is an important driver of economic growth in both regions. The EU27 is the LAC’s third largest trade partner, after the US and China, while LAC countries are the EU's fifth largest trading partner after China, the United States, the United Kingdom and Switzerland. The total amount of EU merchandise trade with LAC countries was € 176 billion in 2020, or 4.8% of total EU27 trade with the world. EU-LAC trade fell by almost 16% in 2020 while due to the COVID-19 pandemic the LAC region recorded its worst trade performance since the global finance crisis, with exports and imports falling by an estimated 13% and 20 respectively.

The EU is the leading investor in LAC, with Foreign Direct Investment (FDI) stock estimated at about € 794 billion in 2019, more than the combined EU FDI stocks in China, India, Japan and Russia. European investments are concentrated in strategic sectors such as renewable energy and telecommunications and are important drivers for a more sustainable and digital economic model in the region. Meanwhile, LAC investments in EU are considerable and have increased over recent years to some 273 billion in 2017.

Making full use of the EU’s many trade and association agreement with LAC will Agreements in the region will be important to revitalise economies and support inclusive growth. The EU has trade and association agreements with 25 out of 33 LAC countries, including fully fledged agreements with Central American countries and CARIFORUM, a multiparty trade agreement with three countries of the Andean Community (Colombia, Ecuador, and Peru), and agreements in the process of being modernised with Chile and Mexico. 

Negotiations with Mexico were concluded with an understanding on last substantive issue (public procurement at sub-federal level) in April 2020. The modernised agreement will build on the already successful Global Agreement and boost EU-Mexico strong political, cooperation, trade and investment partnership. The objective is now to finalise internal procedures with a view to sign the agreement. 

The EU is also moving forward with an agreement with Mercosur countries. If the EU-Mercosur Association Agreement, which includes a trade pillar for which a political agreement was reached in June 2019, is successfully ratified, the EU would then have comprehensive agreements governing trade relations with nearly all of Latin America and the Caribbean (with the exception of Bolivia, Cuba and Venezuela).

EU and LAC also collaborate on the multilateral trade agenda. The EU and LAC countries are keen to strengthen the WTO, which is at the core of the rules-based multilateral trading system, and work together towards a reform of the organisation.