The Pacific Alliance has approved the incorporation of Argentina as the 43rd observer state of the integration scheme. The decision constitutes an effort by new Argentina’s President Macri to establish closer ties with the PA.

Photocredits: domdeen/FreeDigitalPhotos.net
What does it mean for Argentina? This move sends a political message from Argentina that the new government is taking serious steps to move away from his predecessor’s -Cristina Kirchner- foreign policy who was very critical of the PA’s approach to regionalism.

President Macri volunteers to become the middle man between the PA and Mercosur to look for means in which both groups could converge. At the political level, this sounds like convincing rhetoric, however, at the practical level it seems more difficult to reach a unified view within Mercosur on how to engage with the PA. More importantly, the political and domestic situation in Brasil and Venezuela raise concerns as to the progress that Mercosur could make in the short term, let alone on its relations with third parties.

What does it mean for the PA? at the political level, it builds momentum for the PA reinforcing the relevance of its open regionalism approach that seems to have faded for more than a decade.

At the strategic and policy level?  The step means an opportunity for the PA to examine and develop a real policy behind the status of observer states and the role they could play. It seems that different states pursue different goals by becoming observer states, some are merely political, while others involve economic and more general cooperation interests. Does the status of observer state suit all the range of purposes and expectations that third states have when expressing their interest to built closer ties with the PA? Probably not, but I’m interested to hear your views in the comments!

Finally, Argentina’s decision proves once again the enormous influence that political leadership and the ideological views of the governments in place have in developing regional ties and convergence.

President Macri will attend the next Presidential Meeting of the PA to be held on 1 July 2016.
Other new observer states of the PA include Czech Republic, Norway, Slovakia, Egypt, Ukraine, and Romania. The total number of observer states is currently 49.

sources: infolatam.com

The Pacific Alliance wraps up the week with a couple of interesting highlights:

Photocredits: KROMKRATHOG/FreeDigitalPhotos.net
First, The fourth forum of innovation and entrepreneurship LAB4+ sponsored by the Pacific Alliance and the promotion agencies of the four members. The event held in Lima, Peru between 1-2 June aimed to connect and strengthen the entrepreneurial and innovation ecosystems of the region. The two main focuses of this year’s event were social innovation and ICTs. This event consisted of a series of seminars, investment rounds, thematic workshops and demo days.

Second the creation of the Strategic Observatory for the Pacific Alliance. An academic initiative looking to link the  government, the productive sector, and academia. The initiative is developed by four of the leading universities across the country members and will be physically based in Chile. The Observatory emerges as a form of think-tank to inform and support the technical work within the working groups of the PA.

It is worth noting that this is not the first initiative in this direction and other universities also have special programs to investigate the Pacific Alliance (see: icesi.edu.co). I guess this situation suggests that efforts should be made to integrate and coordinate the initiatives that emerge in relation to the study of the PA. Sharing a common technological platform on the projects that have been developed and will be developed would be a great way to ensure academic coordination, reduce the risk of overlapping and duplication efforts and encourage incremental knowledge. Moreover, it would be interesting to explore to what extent universities from other observer members could also join this promising initiative!

sources: http://magisterenderechollm.uc.cl

With the signature of the Transpacific Partnership Agreement (TPP) in early February, a recent trend seems to have emerged on the expanding number of mega-regional agreements. The Transatlantic Trade and Investment Partnership (TTIP) between the United States and the EU; the Trade in Services Agreement (TiSA) between 23 WTO members including the EU, focused on services and services related disciplines; and the Regional Comprehensive Economic Partnership (RCEP), the Asia-driven quota that includes the 10 ASEAN members and six countries including China, India and Japan. All these agreements are expected to be concluded by the end of 2016.

If they are meant to be more than preferential agreements, what are the mega-regional agreements ? Recent literature suggests that these agreements are in fact preferential trade agreements between countries or regions with a major share of global trade and FDI, with two or more parties that have either a driver position or act as hubs in global value chains. If this is the case and the PA is not another mega-regional agreement not only by definition but also attending to its particular goals of deep integration,  free movement of factors, towards social inclusion and reduction of socio-economic inequality then: What is the relation between the PA and these mega-regional agreements? How would they impact the PA developments? This seems an interesting issue to look at.
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This week ends with a lot of activity within the Pacific Alliance. I would like to recall two important events:

Photocredits: Ikuni/FreeDigitalPhotos.net

• The 34th Meeting of the High Level Group (HLG) comprised by deputy ministers of trade and foreign affairs to follow up on the progress in several fields, including the work plan 2015-2016 on financial issues proposed by the Ministers of Finance of the PA members and the CEAP recommendations. The HLG also reviewed the progress of the technical groups on external relations, institutional matters, SMEs, services and capital, among others between the 25th-26 April. The technical groups met prior to the HLG assessment of progress.

• The Commercial Protocol will finally enter into force on the 1st May 2016. Public sources often refer to the benefits of the protocol that include liberalisation in 92 per cent of goods with a commitment to gradually reduce the tariffs of the remaining 8 per cent of goods. However there are some caveats for a better understanding of the real benefits of the commercial protocol. In fist place the actual levels of liberalisation in goods through the protocol are not as high, considering the already high levels of liberalisation achieved through previous bilateral FTAs. Gains here are then more marginal than what is suggested, including some goods that were previously excluded in the liberalisation schedules. Potential gains move in the direction of the rules of origin negotiated and the possibility of accumulation of origin rather than the actual levels of tariff reductions achieved. The flexibility on the rules of origin and accumulation/cumulation between the member states is one means to progress and build regional value chains. Continue reading

Photocredits: Tuomas Lehtinen/FreeDigitalPhotos.net

As you may already be aware, one of the requirements for new members to enter into the PA is that it has signed free trade agreements with every of the other PA members. This is one of the reasons why Colombia and Costa Rica sped up the negotiations and process to conclude an FTA, since it was the only country of the PA that Costa Rica did not have an FTA with. After the approval by the Colombian Constitutional Court the entering into force of the agreement is expected sometime in next quarter of the year. But what comes next for Costa Rica as an observer candidate to the PA? To start this means that the country is one step closer to becoming a PA member.

Costa Rica has conducted a study on the feasibility of entering into the PA and an internal review process is under way  to make a final decision after a shift in the government intentions with the change in presidency. Among the issues  at the national level that could hinder the entering of Costa Rica to the PA is the agricultural sector opposition. It seems very concerned with the impact that a future PA membership will have on it prospects. Continue reading

The first week of March the High Level Group (HLG) of the Pacific Alliance gathered in its XXXIII official meeting in the city of Bogota, Colombia to follow up on the commitments and mandates of the last presidential declaration and to prepare for the presidential meeting programmed for July 2016.

Photocredits: alianzapacifico.net

The meeting of the HLG was preceded by two days of discussions within the technical groups. The Deputy Ministers examined the progress in areas such as institutional matters, cooperation, the movement of people,  SMEs, single window clearance systems, trade facilitation, customs cooperation and the communication strategy. The technical group on Genre Focus met for the first time.

The HLG also discussed the progress of the Ministers of Finance working plan for 2015-2016 and the situation in regard to the recommendations and proposals presented by the Pacific Alliance Business Council.

The next meeting of the HLG will be at the end of April 2016.

sources: www.alianzapacifico.net
www.sela.org

by Eric Leroux

The objective of the Pacific Alliance with respect to trade in services is to “build in a participatory and consensual way an area of deep integration to move progressively towards the free movement of […] services.” The key word in this sentence is “progressively”, and the missing, but (at least) equally important, one is “seriously”.

If one were to speak of the Pacific Alliance’s achievements in the services area in speed terms, one would say that it still is in first gear. Not that this is any different from what is taking place under other trade-liberalizing agreements; to the contrary, the Pacific Alliance is dutifully espousing the existing models reflected in, on the one hand, the NAFTA, and on the other, the GATS. The Pacific Alliance’s services disciplines negotiated thus far draw on both models, using, presumably, what is considered to be the best of both models. The problem is that those two models are now flawed: they no longer reflect the reality of the marketplace, nor truly tackle head-on those issues that will be determinative of real, significant, liberalization of services trade in the coming decades. Continue reading

I would like to share with you some insights on what I see are issues in which the PA should focus attention during 2016:

1. The Commercial Protocol entering into force early in the year and the corresponding steps for the implementation of many of its provisions. Two examples are the provisions on mutual recognition of professional licencies/authorisations/certifications to professional services suppliers, and the working plan on harmonization for sanitary and phytosanitary measures. The particular implementation of the commercial protocol should be accompanied with a road map allowing follow up on the progress made.
2. Definition of the steps forward for the formation and consolidation of regional value chains through the design of regional policies in this regard, including strategies for participation of SMEs. This issue is a basic example of how important the design and construction of regional policies will be for the long term vision of the PA. The PA as a whole should not underestimate the importance of the members insertion into other regional value chains, for instance in Asia, with products and inputs of more added value rather that just primary raw materials.

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