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

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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.

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

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

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.
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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.

Early this month the Colombia Constitutional Court declared the law approved last year by which the Pacific Alliance members created a Cooperation Fund unconstitutional.

The Cooperation Fund is the mechanism designed to finance and put in operation all the core cooperation initiates within the Pacific Alliance including: social development, innovation, climate change and environmental action, and SMEs. The Fund is made up from the yearly financial contributions of the members and other contributions by third parties.

The decision was adopted because the Law 1749/2015 did not comply with all the formal procedures required by the Colombian Constitution for its approval by the Congress when it was issued last year.

This means that Colombia will need to start a new process for incorporation of the agreement for a cooperation fund with further delays for the fund to enter into operation which is not foreseen for early 2017.

It is not the first time a situation like this has taken place. If we remember back, the Colombian Constitutional Court declared the law approving the Framework Agreement of the Pacific Alliance unconstitutional for procedural reasons in 2014.

In the meantime, the Corporation Fund Agreement that was signed in May 2013 is in its final stages of incorporation by the other member states. Peru issued the formal Supreme Decree (N° 073-2015-RE) incorporating the Cooperation Fund Agreement in late 2015, after the congress approval of the agreement.  Procedures are also now finished in the Chilean Congress.

sources: www.corteconstitutional.gov.co
www.elperuano.com.pe
www.leychile.cl

Photocredits: Jan Pietruszka/FreeDigitalPhotos.net