*[Peru, Chile, Colombia and Mexico]
When I interviewed Chilean President
Sebastian Piñera last week after the signing of an agreement to create the
four-country “Pacific Alliance” trade bloc and he said it’s Latin America’s
most ambitious economic integration project, my first reaction was of
respectful skepticism.
After
all, Latin American countries have signed dozens of super ambitious economic
and political integration blocs in recent years — including those known by
their acronyms as ALADI, SICA, MERCOSUR, UNASUR, and CELAC — that were
inaugurated with great fanfare, only to be quickly forgotten.
But
Piñera told me there are solid grounds to believe that the new bloc will be
different, among other things, because it starts out with a big advantage: its
members already have free trade agreements between themselves, and can thus
move on to more ambitious goals, such as creating a united front to negotiate
free trade deals with Asia, the world’s most dynamic economic area.
“This
is an alliance that will go far beyond free trade, because it seeks an
integration that allows the free flow of goods, services, investments and
people,” Piñera said. “And additionally, it seeks physical integration through
joint infrastructure and energy projects.”
The
combined economies of Pacific Alliance members already amount to the world’s
9th largest economy, and their total exports represent 55 percent of Latin
America’s overall exports, he said. The Pacific Alliance’s current exports are
already nearly twice those of South America’s MERCOSUR common market, made up
of Brazil, Argentina, Uruguay and Paraguay.
Top
officials of Pacific Alliance member countries tell me that one of the new
group’s main objectives will be signing a free trade deal with the 10-nation
Association of Southeast Asian Nations (ASEAN), which includes Indonesia,
Thailand, Vietnam and Singapore.
At the
June 6 signing ceremony in Antofagasta, Chile, the presidents of Mexico,
Colombia, Peru and Chile — with Panama and Costa Rica attending as observer
countries that hope to join the group soon — agreed that the new bloc will
finalize creation of the first combined Latin American stock exchange, which is
already in motion but does not yet include Mexico.
They
also agreed to set up joint export promotion offices in Asian countries,
eliminate visa restrictions for their citizens, and create a joint university
system where — much like in Europe — students will be able to get credits for
their studies in any of the bloc’s member countries.
On the
trade side, they agreed that the Pacific Alliance will seek to eliminate all
import duties and country-of-origin rules between member countries by the end
of 2012. The four leaders also agreed to start negotiations to create a
supranational joint dispute resolution system, which — like in Europe — would
give extra security to companies investing in any member country.
Most
international trade experts I talked to are generally upbeat about the Alliance
of the Pacific.
“This
looks like something more serious than other Latin American integration
efforts,” said Antoni Estevadeordal, head of the Inter-American Development
Bank’s integration and trade division. “If there’s continued political will to
push this forward, we may see a something new and very promising in the
region.”
Osvaldo
Rosales, head of the trade and integration division of the United Nations
Economic Commission for Latin America and the Caribbean, told me that “it’s an
interesting initiative, with a lot of potential, although it could have been
even more ambitious.”
Rosales
explained that while it seeks the free circulation of goods, services,
investments and people, it only contains a fixed deadline for the free movement
of goods by the end of this year. There is no such fixed deadline for the
remaining three subgroups, he added.
My
opinion: The new Pacific Alliance makes sense for a reason that is much simpler
than most of the agreement’s clauses, which is that no Latin American country
on its own — even the biggest ones, like Mexico — has the export capacity to
supply manufactured goods to Asia’s giant markets. If Latin American countries
want to sell cars, refrigerators or shoes to Asia, they will have to create
joint production chains, and negotiate joint trade deals.
The
four members of the new bloc, plus Panama and Costa Rica if they join them,
have a fabulous opportunity in front of them. I remain a respectful skeptic
about the Pacific Alliance, but much less so than about all other existing
Latin American trade blocs.
ANDRES
OPPENHEIMER
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