1. NS4540 Winter Term 2019 Pacific Alliance
Oxford Analytica Latin America: New Bloc aims for op;en regionalism, May 23, 2013; Oxford Analytica, Latin America/iAsia, Pacific Alliance’s Roe Eexpands, July 31, 2017

2. Overview I
The Pacific Alliance includes Chile, Colombia, Mexico and Peru
Established in June 2012
All had free trade agreements with each other
Main goal: Promotion of the free circulation among member countries of
Goods
Services
Capital and
People
Issues
No clear road map in achieving this goal
Course towards economic integration began with small, pragmatic measures rather than grand designs and heavy institutional engineering.

3. Overview II
Clear the bloc had a number of important barriers to overcome:
Mexico is already deeply integrated with the U.S. and Canada through NAFTA and
Geographical distance between countries, combined with transport costs make it difficult to promote productive supply chains and other forms of deeper economic integration
Little natural complementarity between economies which remain commodity exporter countries whose main markets are outside the region

4. Background I
At the time of formation the economies of the Pacific Alliance collectively rivaled that of Brazil
They have a joint population of around 215 million compared to Brazil’s 201 million (2013)
Taken as a single economy, the Pacific Alliance is the second largest after Brazil
In 2012 exports from Chile, Colombia, Peru and Mexico amounted to $556 billion, significantly larger than that of Mercosur ($435 billion)
Countries have also
Moved to create a joint stock market
Eased requirements of business and tourism visas and
Established several inter-governmental cooperation projects in other policy areas

5. Contrast with Mercosur I
Pacific Alliance countries are fundamentally different from the Mercosur countries
Mercosur has become increasingly inward-oriented and protectionist
Pacific Alliance countries are among most open economies in the region
In contrast with Mercosur, the countries of the Pacific Alliance are parties to a large number of free trade agreements
While the countries of Mercosur increasingly impose non-tariff barriers to internal trade in violation of the sub-region’s market’s rule, the Pacific Alliance countries committed to abolishing tariffs on 90% of their trade

6. Contrast with Mercosur I
Possible to perceive Pacific Alliance countries as an alternative to
The rise of leftist governments in the region and
Brazil’s aspirations to regional leadership

7. Assessment Pacific Alliance
Alternative to Mercosur
Closer to what Mercosur was intended to be when it was set up in the 1990s and has ceased to be – open regionalism
The bloc however faces significant obstacles on the road to deeper integration
Pacific Alliance has emphasized deepening ties with Asia since its founding
However movement toward Asia presents opportunities but also risks

8. Opportunities I
With the U.S. abandonment of the Trans-Pacific Partnership (TPP), Asian and Latin American governments have discussed variety of initiatives to deepen integration between the two regions.
China and Japan both vying for leadership role in the Asian – Latin America relationship
With Asia, the Pacific Alliance well positioned to take on greater relevance
Chile, Peru, and Mexico
have free trade deals with Japan (a Colombia-Japan deal is in the works).
Are part of the TPP which the remaining eleven partners are looking to revive

9. Opportunities II
The Pacific Alliance also signed a wide-ranging agreement with ASEAN in 2016 signaling its intention to engage more actively as a bloc with Asian counterparts
With regard to China
A Pacific Alliance- wide deal remains unlikely
However China can be expected to ramp up its engagement with PA countries both individually and as a bloc.
China has a clear interest in financing infrastructure projects in the region. This goal is consistent with PA’s objective of promoting cross-border infrastructure projects

10. Recent Initiatives
Since 2014 the PA has held high-level talks with Mercosur, taking advantage of more market-friendly administrations in Argentina and Brazil
To extent these talks result in actions that facilitate doing business throughout the region
Streamlined customs procedures and
regulatory standards
The economic and political importance of the PA for Asian counterparts will continue to growth

11. Assessment Likely developments
The PA ill move ahead on its broad integration agenda including
Trade
Investment
Financial Markets and
Labor mobility
However its ability to take on a larger political and economic role will depend on
Reaching trade deals with external partners and
The evolutions of its relationship with Mercosur