The Pacific Alliance had a busy week closing with the Presidential Summit on Friday 1 July where new mandates to guide the progress of the integration mechanism were decided on.
The presidential summit was preceded by meetings of the High Level Group, The Free Trade Commission, The Ministerial Council and the Metting of Ministers of Finance. The IV Business Metting also took place on the 29th June. In addition, the third meeting of higher education institutions of the PA on the 21 and 22 June was an opportunity to discuss the role of the academic and student mobility platform for the integration of the PA countries.
Steps were taken this week on various fronts. First the PA members approved an accord that sets the tax rate on pension funds investments returns at 10 percent. This agreement covering the pension funds from the four members is an effort to boost investment in infrastructure projects while opening up the pool of investment options for these entities within the region. However this is a ceiling rate that will only require implementation by Mexico since Chile and Peru have a rate that is already 5 per cent, while Colombia has a zero per cent rate for pension funds from the PA. In addition, a decision on the creation of a regional infrastructure fund is still pending.
The terms of reference for future negotiations with third states wishing to become associates of the PA were also approved. As we anticipated in a previous post Canada, New Zealand and Australia have expressed their interest in starting the process to become associate states. Singapore would also be enlisted for a future negotiation.
Moreover, the Free Trade Commission approved several decisions including the procedures for electronic certificates of origin as part of its trade facilitation agenda.
Colombia received the Pro-tempore presidency of the mechanism for the following year. This role will require affirmative leadership from the member to encourage progress on strategic topics such as physical mobility, pension portability, the digital agenda, and the services economy. Regarding the latter the countries have an under explored potential for intra-regional trade in non-traditional services including business services and IT services. However the agenda to boost intra-regional trade in services seems quite modest at the moment. As the process of negotiating preferential agreements with potential associate states seems imminent the pro-tempore presidency by Colombia should play a role in defining the strategic content of a new generation agreement that could set the pace and precedent for later agreements.