Archive for the ‘Pacific Alliance’ Category

The Pacific Alliance: Colombia, Chile, Peru and Mexico

Monday, July 15th, 2013

“After a decade of chavismo, these four countries are what is left of liberal democracy in Latin America” – and that’s good news:

The Next Big Free-Trade Breakthrough As a single region, the Pacific Alliance will be the eighth largest economy in the world.

Each of the members already has a bilateral free-trade agreement with each of the others and each has an FTA with the United States. Peru began opening its markets during the Fujimori government (1990-2000). With almost 20 years of Nafta under its belt and a decade of sparring with Chinese producers, Mexican business has become accustomed to foreign competition and is hungry for new markets. Chile has been opening its markets unilaterally for decades, and Chilean producers are world-class. Colombia, arguably the least open of the pack, is led by pro-market President Juan Manuel Santos.

As a single free-trade region, the Pacific Alliance will be formidable. Its population—almost 210 million—is 36% of Latin America and larger than Brazil. In 2012 the four economies combined accounted for 36% of the region’s gross domestic product, roughly half of the region’s total exports and imports. As a single region, the alliance would be the eighth largest economy in the world and the seventh largest exporter, according to Mexico’s economy ministry.

The alliance will also liberalize competition in services and provide a framework for certainty and regulatory stability for foreign investors.

Read the whole thing.

Good news Sunday: The Pacific Alliance

Sunday, June 2nd, 2013

The Pacific Alliance met in Colombia last week, for the seventh time since its creation in June of 2012; This is good news for the world, not just for the region.

For starters,

there are two major “requirements” for a nation to join the Alliance. First, the government of the aspiring member state must adhere to the charter of the Alliance, which stresses respect for democracy.

In addition, the second requirement to joining the Alliance is that a new member must have free trade agreements with the other Alliance members before becoming full members. Hence, Costa Rica will only join the Alliance after President Chinchilla signs a free trade agreement with the Colombian government (San José [Costa Rica] already has FTAs with other Alliance members).

Member countries Chile, Colombia, Peru and Mexico were joined by Canada, Spain, Australia, New Zealand, Uruguay, Japan, Guatemala, Costa Rica and Panama,

These countries and investors from outside of Latin America are attracted by the positive business climate among Alliance members—they occupy four of the top-five spots in the World Bank’s Doing Business in Latin America ranking—and encouraged by the fact that the bloc is serious. It is focused on trade, investment and immigration rather than politics and ideology.

Keep in mind that

The goal of the alliance is to create a free-trade corridor of all countries in the Americas with a Pacific coast. The hope is that dropping barriers on labor, finance and trade will help the Alliance become a hub for commerce with Asia.

The reason Japan, Canada, Spain and Australia attended as observers is that members of the Pacific Alliance are all part of the Trans-Pacific Partnership; they are serious about growth and prosperity. Bloggings by Boz lists what they are getting done:

  • The four current members dropped tariffs on 90% of the goods traded among them (something that was mostly done due to bilateral free trade agreements) and committed to completing the final 10% within the next few years.
  • The countries have dropped visa requirements with each other.
  • The four countries will likely create a joint visa system – Visa Alianza del Pacífico – that will allow tourists to visit all four countries on just one visa.
  • Peru dropped business visa requirements for the other three members.
  • The four current members agreed to open joint embassies in Africa and Asia.
  • The countries will conduct a coordinated trade mission in Africa and tourism promotion globally.
  • The creation of a fund to support small and medium sized businesses.
  • A fiscal transparency agreement to prevent businesses from avoiding taxes.
  • Agreement on educational exchanges, including 400 annual scholarships.
  • Agreement to consolidate a scientific network on adapting to climate change challenges.
  • Mexico signed an agreement with Chile to export meat.
  • Mexico moved forward on integration into the Integrated Latin American stock Market (MILA).
  • Costa Rica signed a free trade agreement with Colombia.
  • Guatemala and Peru will have a free trade agreement within the next few months.
  • Guatemala dropped its tourist visa requirements for Colombia.

Decreasing Trade Barriers and Increasing Economic Growth

This initiative is a significant step forward to synchronize members’ trade commitments and is aimed at enhancing trade with the bloc’s most dynamic partners in East Asia.

The Pacific Alliance numbers speak for themselves. These four economies are the most dynamic in the region, representing more than 40 percent of Latin America’s economy with a market of more than 210 million people—more than one-third of the region’s population. Since 2010, these four economies have grown at a higher rate than their neighbors and have also invested at a greater rate—25 percent of their combined gross domestic product (compared to just 20 percent elsewhere).

The Pacific Alliance is already having an effect on regional politics. Daniel Duquenal posts,

Brazil in recent years had a campaign to gain a permanent seat in the security council of the United Nations. All the efforts have been lost, I dare say with the recent fiascoes. How can a country aspire to such a rank when it is unable to protect democracy in its area of influence, and furthermore generates deep divisions as it may happen soon between Mercosur and the Pacific Alliance? Clearly Itamaraty hopes of world leadership are seriously compromised as its actors are revealed to be mere grocery shop managers, more worried about Venezuela paying its bills to them than the long term perspective. Or mere amoral operatives if you prefer. Let’s say it: Brazil is not ready for the major leagues, Colombia is.

Democracy, free trade, investment and immigration: keys to the well being of the region, and the world.