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Regional Integration in Latin America - The Pacific Alliance a Way Ahead
News, Posts

Building Bridges: Meeting Sponsoring by the PA

While President Trump has recently withdrawn from the TPP Agreement, not yet ratified, and announced his interest in negotiating on a bilateral basis any commercial agreement, the Pacific Alliance has made an interesting political move.  The PA has called for a meeting to take place 14-15 March in Chile.

The purpose of the meeting is gathering not only foreign affairs ministers of the TPP negotiating parties but also China, South Korea and Colombia. Although no formal commitments are expected from the ministerial summit, it will provide a forum for Asian and PA countries to discuss ways to move forward in the economic front while counter-reacting to the protectionist narrative of recent months in the US.

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March 3, 2017by Ana Maria Palacio
Featured, News, Posts

Between Rhetoric and Reality: In Search of the Fifth Member

Save energy Chile _domdeen

Photocredits: domdeen/FreeDigitalPhotos.net
President Bachelet has recently expressed particular interest in Argentina becoming a PA member, and as Pro Tempore president of the integration mechanism will devote efforts to this end. Let’s remind us that since the second semester of 2016 Argentina officially became an observer of the mechanism.

However, going beyond the political rhetoric of presidents we need to consider the long-term economic and institutional implications for the PA in this scenario.

Despite efforts by the Argentinian president to signal a change in foreign commercial policy, there is a lot of uncertainty as to whether this is a move reflecting a shift in state policy or rather a short term policy of Macri’s government. Uncertainty on the continuity of this policy after the long lasting protectionist approach of the Kirchner era would not contribute to ensuring stability in this front for the PA. The PA is an integration model that has clearly characterised itself by the alignment of its members regarding commercial foreign policy and development approaches. Changes in unconsolidated state policies by a newcomer such as Argentina could not only slow down the pace but lead to stagnation, as seen in previous integration experiences.

On the other side of the table, Argentina should and will probably focus on putting things in order within Mercosur after Venezuela’s suspension from the integration scheme. This situation triggered a most recent institutional crisis for Mercosur and Argentina’s delegation of the pro-tempore presidency. Joining the PA as a full member would only represent another example of ‘the scape forward approach’ that Latin American governments and states often take towards regional integration.

Finally, I am not sure that with the short length of pro-tempore presidencies within the PA Chile should be investing efforts into extending the number of countries in the PA rather than setting and implementing a work agenda that could strengthen the economic ties and other integration areas within the already existing members. People might say these are not excluding issues but they de facto could be when limited human resources are devoted to performing multiple tasks like is the case in the PA. There is a need to prioritise efforts and areas of work.

The issue could be just part of the rhetoric accompanying the recent presidential visit of Bachelet to Macri, but places on the stage a major missing factor: a clear policy line and criteria regarding new members accession/entry to the PA.

Is the PA ready for the newcomers?

I look forward to your comments on this issue.

Sources: panampost.com

reuters.com

January 14, 2017by Ana Maria Palacio
Editor's choice, News, Posts

The Pacific Alliance after Trump

I would like to share with you some views on the foreseen implications of  Trump’s future presidency for the PA.

 Photocredits: coward_lion/FreeDigitalPhotos.net trump_coward_lion
Unlike the enthusiasm showed by Obama about the establishment and progress of the PA, it is expected that President Trump will not give high relevance to the PA in his foreign trade policy, especially if his manifested approach is bilateral agreements rather than regional. It will be interesting to see if he decides to withdraw the status as an observer state of the process, but this move will certainly not be a priority on his list of concerns. This decision would have political costs that he might not be interested in paying, especially because there has not been a particularly strong working agenda with the US derived from its position as an observer.

The PA has concluded cooperation agreements with Canada and ASEAN but not the US. The likelihood of a future partnership or cooperation agreement between the PA and the US during Trumps’ presidency is rather low, to say the least.

Trumps’ Presidency represents an opportunity for Mexico to strengthen its economic ties with its other PA allies to diversify its commercial partners to reduce the economic dependency on the US.  The new scenario could benefit and push the PA economic outcomes. This time driven not only by desire but also by eventual economic necessity based on the actual approach that Trump decides to take towards Mexico once in charge.

Elected President Trump has not expressed any support or interest for the peace talks in Colombia, in fact he has kept quiet on this topic. The future implementation of the peace agreements in Colombia, if approved, has lost an important regional ally —the United States. Possible economic, technical or capacity building support to the implementation process of the agreements seems off the table today.

Trumps’ approach to the region ultimately could lead to a decline in the regional leadership of the US within the Americas, because the domestic agenda that brought him to the White House will take precedence over any regional issue that is not directly under the radar of its electors.

The chances of TPP being approved by the US Congress during the lame duck, fade with the days, and this was the last and only chance for the agreement to be approved. As the Congress returns this week, TPP is not part of the agenda, while Senate majority leader, Mitch McConnell, has stated that “it is certainly not going to be brought up this year.” The possible failure of the TPP would represent the loss of economic opportunity for the PA members individually (Mexico, Chile and Peru), especially for Peru which was estimated to benefit the most. It would be a lost chance to update bilateral trade agreements for Chile and Peru, and NAFTA in the case of Mexico.

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November 16, 2016by Ana Maria Palacio
Editor's choice, News, Posts

Interview to the PA Presidents: What Did They Have to Say?

The presidents of Chile, Colombia, Peru and the Mexican Secretary of Economy were interviewed on the 21 September at an event by the Americas Society/Council of the Americas.

What did they talk about that could give us an indication of their perspectives about the PA?

The discussion tackled all sort of issues including, to a large extent, domestic concerns of the PA members such as the peace agreement in Colombia and how it could increase prospects of trade in tourism services and agricultural industries, as well as a package of domestic reforms to encourage formalisation of businesses in Peru promoted by President Kuczynski. The panel members presented their views on the likelihood of Trump becoming the next US president with the Mexican Secretary bringing out a colourful remark. The crisis in Venezuela and the question of whether the PA should be doing a bit more on this subject matter was also raised. No clear common view on a positive action of the PA members in this topic was envisioned.

With this range of issues on the table, a couple of interesting points were mentioned about the PA.

President Bachelet pointed out that the main topics of interest to  work on during Chile’s pro-tempore presidency were: education, innovation, science and technology, trade facilitation, internationalisation of SMEs, the implementation of the Commercial Protocol, the cooperation agenda with the 49 observer states and finally convergence with ASEAN and APEC. The ambitious list of topics refers greatly to matters related broadly to intergovernmental cooperation, but there is still the query on the extent to which the priority topics relate to the goal of deep integration and the free movement of services, people, capital, and goods. President Bachelet did not refer to the particular instruments and mechanisms through which the priority topics will be addressed but in practice they include interesting efforts such as the SMEs Observatory (alianzapacifico.net) and an Entrepreneurial Capital Fund, the interoperability of the single window clearance systems and later mutual recognition of the authorised economic operators once the program of authorised economic operators is fully implemented by the members.

Ildefonso Guajardo, Mexico’s Secretary of Economy, referred to some aspects in which the PA should be working on in order to achieve real economic integration. He brought up services liberalisation among the PA members as a strategic issue, new ways to approach common markets more efficiently and more generally alluded to better public policies to support this integration. Despite the relevance of all the topics mentioned by Guajardo it was not clear to me how much progress the PA has made on this front and whether these topics are part of the PA agenda in the short and long term. In addition, he presented a view calling on the need to make the PA a priority for the members and the call to ‘open up to action.’ These views imply the relevance of addressing topics that are more controversial and sensitive among the PA members if deep integration is to be achieved. These topics include regulatory coordination and reduction of heterogeneity in areas like taxation regimes towards deeper capital market integration.

Finally, the signature of an agreement with ASEAN was announced during the event which hopefully could lead the PA to more concrete activities and the development of an agenda towards the enhancement of an economic relation with the Asia Pacific Region.

To see the full webcast, please visit the link below.

sources: www.as-coa.org

September 23, 2016by Ana Maria Palacio
News, Posts

Results of Puerto Varas Presidential Summit of the PA

Puerto Varas_David Ubilla
The Presidents of the Pacific Alliance gathered to discuss the progress and steps forward in Puerto Varas, Chile on the 1st July 2016. The last meeting of the Presidents took place almost a year ago.

The highlights of the Presidential Summit and  the meetings on the outskirts of it include:

  • General Guidelines on the Relational Aspect: The presidential mandates defined the basic activities to undertake in the short term regarding relations with observer states based on cooperation in four key areas: (i) trade facilitation; (ii) education; (iii) internationalization of SMEs; and (iv) science, technology, and innovation. A meeting with ministers of the 49 Observer states took place on the 30th June. Moving forward the PA will negotiate a Cooperation Framework with ASEAN and work on the areas agreed with Mercosur and the European Union. The PA recently signed an ‘Association Agreement with Canada’ setting the basis of the future cooperation between the two. Moreover, PA is examining the feasibility of a FTA with New Zealand.
  • A large list of mandates is developed through the Presidential Declaration with nineteen areas for further action along with the agenda with third states. The mandates refer to activities in the areas of green development and sustainability, education, gender, joint work by health authorities, trade facilitation and customs cooperation, exploratory works in the area of labour and labour mobility, movement of people and migratory transit, specific cooperation within this technical group, services, consumer protection, regulatory cooperation and technical barriers to trade regarding specific products, SMEs, participation of SMEs in government procurement, tourism, innovation, pilot program to speed up patent processes, promotion of cultural products, sustainable mining and good practices, and promotion activities of the promotion agencies.
  •  The Council of Ministers of Finance received a mandate to develop an action plan for the next year to further activities in the four key areas of work defined within the Paracas Declaration last year. These areas cover (i) financial integration, (ii) the development of a mechanism for infrastructure investment; (iii) catastrophic risk management; (iv) fiscal transparency.
  • The ad hoc institutional structure keeps growing with the establishment of the Technical Group on Environment and Green Growth, The Labour Group and the Sub-Group on Digital Agenda.

The Presidential Summit was preceded by the III Business Summit of the PA gathering entrepreneurs and SMEs from the members, Brazil, Argentina, Costa Rica and Canada. The XVI meeting of the Council of Ministers also took place on 30th June 2016. After these meetings, Chile will assume the Presidency of the intergovernmental mechanism for the next year.
Photocredits: the photo in this post has been published under a Creative Commons license on Flickr under the user “David Ubilla” link: flickr.com
Sources: canadainternational.gc.ca
alianzapacifico.net
infolatam.com

July 15, 2016by Ana Maria Palacio
Editor's choice, News, Posts

The Pacific Alliance Welcomes Argentina as a New Observer State

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.

Argentina 2_domdeen

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

June 13, 2016by Ana Maria Palacio
Editor's choice, News, Posts

Pacific Alliance: This Week’s Highlights

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

Innovation 3_KROMKRATHOG

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

June 4, 2016by Ana Maria Palacio
Editor's choice, News, Posts

Meeting of the High Level Group and Entry into Force of the Commercial Protocol

This week ends with a lot of activity within the Pacific Alliance. I would like to recall two important events:

Path_lkunl

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.
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May 1, 2016by Ana Maria Palacio
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About Editors

Hello my name is Ana Maria Palacio. I am a PhD candidate at the University of Melbourne. This blog is about my research project, the Pacific Alliance.

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