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Mexican Summit Continues Positive Run for Pacific Alliance

By: Adriana Peralta - @AdriPeraltaM - Jun 23, 2014, 8:14 am

EspañolOn Friday, June 20, Mexico hosted the Ninth Summit of the Pacific Alliance, attended by the president of each member nation: Enrique Peña Nieto of México, Michelle Bachelet of Chile, Juan Manuel Santos of Colombia, and Ollanta Humala of Perú. During the summit, Colombia handed the chairmanship of the Alliance to Peña Nieto, who will lead the union as president pro tempore for one year.

The Pacific Alliance, representing the eighth-largest economy in the world, is a regional integration initiative created on April 28, 2011. With 32 observer countries and prospective members, such as Panama, it aims to move toward the free exchange of goods, services, capital, and people among them.

Víctor Becerra, project coordinator for Mexico at the Friedrich Naumann Foundation (FNF-Mexico), told the PanAm Post that “The Alliance has been an excellent tool for promoting open and competitive economic policies in Latin America. In each of the four member countries, it has shown that the free market, with the least possible intervention, works; and works very well.”

“The Alliance also demonstrates a successful strategy for the four countries in terms of greater international presence and joint negotiation power, especially within the Pacific region. Without it, the negotiation power of each individual country would be substantially reduced,” said Becerra.

Organigram of the Pacific Alliance
Organigram of the Pacific Alliance. (Pacific Alliance)

The structure of the Pacific Alliance is headed by the presidents of the four countries, who work in partnership with the Council of Ministers, integrated by the Ministers of Foreign Trade and Foreign Relations of the same countries. The High Level Group (HLG) of two deputy ministers of foreign trade and foreign relations, assesses the progress of the technical groups that devise new ways of reaching out and engaging with other regional groups. Other technical groups and subgroups carry out negotiations among the countries of the alliance.

México: Getting the Most Out of the Alliance

First Macro Business Round celebrated in Cali, Colombia
First Macro Business Round celebrated in Cali, Colombia. (Pacific Alliance)

After the North American Free Trade Agreement (NAFTA), the Pacific Alliance is the most important trade agreement in which México participates, and it has taken full advantage of it. It is the leading exporter among the four countries of the alliance, generating 68 percent of its total export volume.

As Becerra of FNF-Mexico says, “It was precisely such [free-market] policies what allowed the country to have a strong export position: México has 12 free trade agreements with 44 different countries. That is the highest number of treaties after Chile, which has 15. Today, Mexico occupies the 15th position among 170 exporting countries, with annual growth of 2.4 percent, which is higher than the world’s average of 2.1 percent.”

Francisco Rosenzweig, undersecretary of foreign trade for Mexico’s Ministry of Economy, said that trade negotiations are moving forward: “It is anticipated that in the next few months we will be able to eliminate tariffs for 92 percent of goods and services, and to reach zero tariff for all goods and services in year 2030, except for sugar.”

In addition, businesses in the four countries of the Alliance estimated that more than 3,000 business meetings were carried out during the Second Macro Business Round of the economic bloc, held on June 10 and 11 in Puerto Vallarta, Jalisco.

According to ProMéxico, most companies seeking to expand their markets belong to the agrochemical, chemical, automotive, food and beverage, pharmaceuticals, and information-technology sectors.

The Second Macro Business Round featured a total of 433 importers and exporters of the four member countries, as well as six buyers from Korea, 13 from Japan, and six from China. The event generated short and medium-term sales of US$185 million, of which US$14 million were spot deals (requiring prompt delivery). The estimated long-term volume of generated sales was around US$300 million.

According to figures from ProMéxico, the First Macro Business Round held in Cali, Colombia, generated sales of US$116 million. Next year, the event will be held in Peru.

The Challenges of the Ninth Summit

The Pacific Alliance comprises not only the four member countries. The bloc also has a strong relationship with the 32 observer nations, so the Ninth Summit introduced a challenging novelty: to develop a specific agenda for each of the 32 observer countries according to the interests of each party, including the discussion of international cooperation mechanisms.

Observer Countries of the Pacific Alliance
Observer Countries of the Pacific Alliance. (Pacific Alliance)

Mexican Deputy Foreign Minister for Latin America and the Caribbean Vanessa Rubio explained the level of integration that the alliance wishes to achieve: “It is a deep and wide-ranging integration, because it implements free trade, but goes further, covering topics related to cooperation in areas such as immigration, finance, culture, and education.” Also, Rubio explained that the alliance is a pragmatic bloc that seeks to achieve concrete results. An example of this is the elimination of visas between the four member countries, and the negotiation of labor benefits for the youth of the four nations.

“When México removed visas for Colombian and Peruvian nationals, it caused, for the 2012-2013 period, a 60 percent increase in Colombian visitors, and a 40 percent increase in Peruvian visitors. This is a concrete, pragmatic result that increased tourism, promoted deeper mutual knowledge among our countries, and also more business among them, which translates into more job opportunities for all,” added Rubio.

Another important challenge going forward is the possible inclusion of Costa Rica and Panama. However, Luis Guillermo Solís, the newly elected president of Costa Rica, expressed concerns about Pacific Alliance membership.

“The questions I have are basically in two areas: one is the pace of the tariff reduction proposed by the Alliance. To my knowledge, it is faster than what is stipulated by the free trade agreements we have with all of the Alliance’s member countries,” said Solis. “And the second set of questions are related to migration, the elimination of visas, and the facilities for nationals from either country to be able to move without restrictions from one country to another.”

Translated by Alan Furth.

Adriana Peralta Adriana Peralta

Adriana Peralta is a freedom advocate from El Salvador and a @CREO_org board member. She is a PanAm Post reporter and blogger, a 2005 Ruta Quetzal scholar, a trained engineer, and an SMC University masters student in political economy. She is also a Pink Floyd fan. Follow @AdriPeraltaM.