VOXXI: The Pacific Alliance shows its force as an economic bloc

The Pacific Alliance shows its force as an economic bloc
W. Alejandro Sanchez
VOXXI
May 23, 2013
Originally published: http://www.voxxi.com/summit-of-pacific-alliance-in-colombia/#ixzz2U7GwAzS1

The members of the Pacific Alliance (Chile, Colombia, Peru and Mexico) started today in Cali, Colombia, its for seventh summit with the goal to develop a strong economic bloc. Even though this is still an organization in its infancy as it was created in June of 2012, the Alliance’s summit has gotten significant media coverage as it encompasses four of Latin America’s major thriving economies.

Moreover, Costa Rica is expected to become a full-fledged member of the Alliance at the summit. Parallel to this high-level meeting, negotiations continue in Lima over the Trans-Pacific Partnership (TPP), an ambitious project that will bring the U.S., the Alliance members and several Pacific/Asian states together in a major transoceanic free trade area.

We will have to see if the aspirations of the governments of Alliance are fulfilled or if these integration projects stall, the latter of which tends to be the general rule in Latin American inter-state relations.

The Pacific Alliance

On Tuesday, May 21, the ambassadors to the U.S. from Chile, Colombia, Costa Rica and Peru, along with the head of economic affairs at the Mexican embassy to the U.S. met at an “on the record” conference in the Center for Strategic and International Studies (CSIS), a renowned think tank located in Washington, DC.

Throughout the gathering the diplomats took turns praising the Alliance and its possibilities, arguing that there are great expectations of what it can do (an audio copy of the conference can be found by clicking here).

They also stressed how several nations and organizations have approached the Alliance and wish to join. For example, as previously mentioned, Costa Rica will also become a member of the Alliance, as Costa Rican President Laura Chinchilla has traveled to Colombia to attend the Cali summit.

In addition, the governments of countries like Paraguay and Portugal have all shown interest in achieving observer status, while New Zealand became an observer last November. Given the economic growth and huge resources (particularly mineral-related) that Alliance members enjoy, it seems that there are a plethora of states from all over the world that want to become affiliated with it.

At the CSIS event, one interesting issue that the diplomats stressed is that the Pacific Alliance is an economic bloc, not a political forum. The statement was meant to address the possibility that nations that have been critiqued for their democratic record, namely Venezuela, could eventually apply for membership in the Alliance.

The diplomats also stated 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.

Does this mean that countries like Ecuador, Nicaragua or Venezuela, (which are often criticized by Washington for their, depending on one’s point of view, less-than-ideal democratic record) could eventually become members of the Alliance? In theory yes; nevertheless, the Pacific Alliance’s current members all share not just a preference for free trade agreements, but also a willingness to maintain and increase ties with the U.S. (i.e. via the Trans Pacific Partnership and military initiatives).

This may prove to be a deal breaker for Quito, Managua or Caracas, which, incidentally, created their own trading bloc, the Bolivarian Alliance for the Americas (ALBA), to counterbalance U.S. financial influence in Latin America.

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 already has FTAs with other Alliance members).

Great Expectations for The Trans-Pacific Partnership and the Alliance

The members of the Pacific Alliance are all part of the Trans-Pacific Partnership, an ambitious initiative to create a trans-Pacific free trade area, in collaboration with countries like Australia and Singapore (another Asian powerhouse, Japan, also has shown an interest in joining the organization).

At the time of this writing, and parallel to the Pacific Alliance’s summit, representatives of the TPP nations are currently meeting in Lima as part of the 17th round of the TPP’s negotiations.  Similar to the Alliance itself, there are high expectations of what the TPP could become.

Nevertheless, a realistic vision of the Alliance’s members must be kept in mind: as much as the members have enjoyed huge economic growth in the past years, they remain fragile economies. For example, Peru, Latin America’s success story in recent years, is still largely dependent on its mining industry (which is known for being unstable).

Besides well-known protests in 2011 and 2012 against the Conga mine project in the Cajamarca region, there have been other, more recent protests. For example, this past January, there were protests in the Cañariaco mining project in Peru’s Lambayeque region. If Peru wants to remain a prominent member of the Pacific Alliance and the TPP, its economy must not be at the mercy of only one industry.

As previously mentioned, the Pacific Alliance is the new and exciting integration project that Latin American nations have come up with. It now joins other recently created blocs, such as the Union of South American Nations (UNASUR), created in 2008, and the Community of Latin American and Caribbean States (CELAC), created in 2011.

Like the Pacific Alliance, the aforementioned agencies also started with a great deal of optimism and ambitious projects, and now have joined the alphabet soup of other Western Hemisphere agencies that do not have many success stories to justify their existence. Let us hope that the Alliance and the TPP, if the latter becomes a reality, are more fortunate and prosperous.

Read more: http://www.voxxi.com/summit-of-pacific-alliance-in-colombia/#ixzz2UDTE0iei