At the time of this writing, the members the Pacific Alliance—a trade bloc of Latin America’s most dynamic economies—are meeting in Punta Mita, in the Mexican state of Jalisco. This two day summit (June 19-20) will set the stage for the next phase of the Alliance’s expansion.
While the Pacific Alliance currently has only four members (Chile, Colombia, Peru, Mexico) the ongoing Ninth Summit will have plenty of observers including several aspiring nations that are vying to become members of the Alliance. Costa Rica seems to be the country most likely to be accepted in the near future, while Panama and Guatemala are possible future candidates. Additionally, a delegation of Honduran representatives is also present in Mexico, according to the news agencylainformacion.com, as Tegucigalpa is also interested in becoming a member— however, it first must sign a free trade agreement with Peru as per a stipulation requiring aspiring nations must have free trade deals with other members of the bloc.
The Alliance has a combined population of around 214 million people along with $2.1 billion USD GDP. Therenowned Mexican daily Milenioexplains that the four countries combined would represent the world’s ninth largest economy; a handsome incentive for other nations to want to join the Alliance.
The governing style of the Alliance has a revolving presidency which lasts one year, and the Punta Mita Summit will serve as the venue for the transition of power to Mexico to control the bloc until 2015.
Much praise has surfaced surrounding the Alliance and on the first day of the Summit—Thursday, June 19—the Peruvian Minister of International Commerce and Tourism, Magali Silva, published an op-ed in thePeruvian daily El Comerciohighlighting the Pacific Alliance’s accomplishments. At one point, she explained how the bloc is “alive, meaning that various themes like commerce, integration, services and capital, freedom of movements…and intellectual property are still being discussed and will be touched upon when the Presidents meet on Friday [June] 20.”
Similarly, Mexican President Enrique Pena Nieto hosted a dinner with his fellow heads of state on Thursday night as part of the summit’s celebrations. TheMexican head of state remarkedthat the Pacific Alliance is the most innovative integration system in Latin America in the past decade.
Due to the likelihood that the bloc’s membership will expand in the near future, coupled with the positive remarks from both President Pena Nieto and the Peruvian minister, a serious discussion surrounding the Pacific Alliance is necessary.
One critical factor that will determine the future growth of the Alliance is the realistic amount of interest by the bloc’s member states in this regional entity. Sadly, Latin America has a bad habit of creating new multinational organizations every few years which gain global notoriety out of the gate; however they often wane after a couple of years.
For example, today we are talking about the success and potential of the Pacific Alliance. If I was writing this commentary 10 years ago, I would be discussing theleftist bloc ALBA, the brainchild of the late Hugo Chavez, as the new exciting Latin American trade bloc that was taking the hemisphere by storm. If we go further back in time to the 1990s, the discussion would focus on MERCOSUR. Nevertheless, this bloc is currently at a standstill, as the member states’ economies have slowed down and the protectionist policies andlegal battlesof Argentina make that MERCOSUR member an unattractive place for investment.
As for the Pacific Alliance, there is a momentum towards becoming a stronger entity by accepting new members, as well as strengthening relations amongst its current ones. Most notably,this past Februaryduring a meeting inCartagena, Colombia, the four member states signed a protocol through which they eliminated tariffs on92% of all goodsand services between them.The remaining 8%will be eliminated within the next 17 years. Because tariffs are one of the most important economic tools a country has for trade protection, this protocol exemplifies that the group’s current leaders do believe in the Alliance as a major trade bloc.
The Pacific Alliance is the new kid on the block in Latin America. It is made up of dynamic members with successful commercial ventures who are pushing for further integration among their membership. Moreover, the bloc plans to approach other regions,such as Asiaand other trading blocslike MERCOSUR for economic partnerships. The Pacific Alliance may be the dream for any Latin American scholar, such as myself, who wants to see the region become more united; however, the problem still remains that the Alliance needs to remain proactive for longer than a few years.