Non-traditional services and knowledge-based services have taught positive lessons to PA governments and businesses alike during the 2020 pandemic. Notwithstanding the tremendous hit that traditional services — tourism, hospitality, passenger transport, and travel — have experienced due to the government measures to stop the spread of COVID-19.

Similarly to the 2008 GFC, knowledge-based services have proved their resilience and ability to adjust to the new environment during the pandemic.

Services sectors in the PA countries have been vital in supporting government measures on mobility restrictions, social distancing and the closure of non-essential shops. While telemedicine, IT services, and the use of big data have helped PA countries in the management of health and sanitary risks, telecommunication services have been the backbone to support work-from-home (WFM) not only for businesses but also for government institutions.

The dynamism and productivity of the knowledge-based services sectors not only continues but in some industries such as call centres and other BPO services increased during the COVID-19 lock-down. New business models have either emerged or sped up their evolution, thanks to the mandatory use of digital platforms to operate. An example of these changes is the increase in the microsourcing of education, professional, and personal training services through digitalisation, despite persistent challenges for Internet access and capabilities. Demand for audiovisual contents, animation services, entertainment and online gaming services, and digital services in support of e-commerce —shopping carts, online catalogues, electronic payment platforms etc — increased in the last five months.

In this regional context, the lack of a regional policy to promote knowledge-based services trade and investment has become more apparent.

The services sector is crying for a regional policy and strategies within the PA that could contribute to delivering results on the goals set in the Pacific Alliance 2030 Vision.  Doubling and consolidating intra-regional services exports demand more robust and long-term regional strategies that are non-existent today.

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Last week the Colombian President, Ivan Duque, stated his interest in establishing a new regional institution (perhaps an organisation) which he suggested to name Pro-South. This regional initiative if successful, would aim at coordinating public policies among South American countries, defend democratic values, including the separation of public powers, promote free market economies and the social agenda. He even suggested that it would replace UNASUR, a regional organisation founded in 2008 under the leadership of Brazilian and Venezuelan left-wing governments. UNASUR entered a significant crisis last year after Colombia’s announcement to withdraw from it and the voluntary membership suspension of five of its twelve members.

The move aims to politically punish UNASUR for its inability to take action against the current undemocratic regime run by Venezuela’s president, Nicolas Maduro.

Colombia’s president said to have discussed the initiative with the Chilean president, Sebastian Piñera and found a positive response. In this short note, we would like to examine the need for a new regional institution of this type and the implications that its establishment could have for the Pacific Alliance’s long-term consolidation.

The announcement of this new regional forum seems to be another perfect example of the “escape forward” rooted in Latin America’s regionalism. This term coins a practice of establishing new regional organisations or fora to pursue similar objectives to already existing ones when those established institutions face a crisis due to lack of political consensus or ideological differences within them. Rather than persevering at solving those political differences, states create new organisations to address similar topics while leaving the organisations that fail to deliver a particular result in a coma.

Building momentum for a new regional forum places Colombia’s president in the regional radar and reclaims the interest for a dialogue targeted at South America. It will be not only a test to its potential regional leadership but also a test to other regional institutions such as the Pacific Alliance, Mercosur and the Andean Community to stay relevant.

The objectives that this organisation are set to pursue are not different to the aims that the above institutions have been seeking for quite a while, questioning the real added value of Pro-South.  Even CELAC, with a more extensive membership and regional coverage over Latin American affairs, seems to follow similar goals. Is Pro-South just a new political statement of the geopolitical swings within South America that has unfolded over the past few years?.

A consensus-based fora such as this one will always face the risk of stagnation that comes with political disagreements of the government members. Moreover, intergovernmental institutions such as the future Pro-South will claim a refocus of priorities by the government officials managing it. It is more than likely that governments running on national budget deficits will not have dedicated human resources for this new instance. On the contrary, the reassessment of priorities and national agendas could contribute to slow down the pace of progress in the existing institutions.

Photocredits: Photo by Gaelle Marcel on Unsplash
Sources: cancilleria.gov.co ; cnnespanol.cnn.com; blueradio.com

The blog Shaping the Pacific Alliance is introducing a new feature that aims to contribute to the ongoing academic and non-academic research about the Pacific Alliance. The new feature is a library that encompasses more than 200 publications examining the Pacific Alliance. From books to journal articles, general articles and briefing papers, the library provides visitors with a substantive number of documents produced mainly in  Spanish and English.

Visitors will be able to research the publications through the general search engine. Users can also employ key terms to find the materials they are looking for. Publications can also be found by their type (eg journal article, working paper) and language. A research cloud depicting the most common terms used in the publications is also available on the right-hand side, at the bottom of the library page. In case you want to have a bit of fun with your research you can give it a go!. Continue reading

The Pacific Alliance closes the year with a busy last week. A couple of significant events took place and deserve some consideration. First the meeting of the technical groups in Bogota from the 11 to the 13 December. Second the presidential election in Chile.

The meeting in Bogota gathered more than a dozen technical groups and subcommittees on issues regarding tourism, gender, institutional matters, digital agenda, education,  regulatory cooperation, innovation, external relations and SMEs. Around 160 government officials from the four countries attended the meeting to discuss progress in the different areas and the action plans for 2018.

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In the face of the fourth industrial revolution, the settling of disruptive technologies and the non-stoppable pace of digitalisation it is timely to question the role that regional mechanisms/institutions play as enablers and governance instances of these technological developments. This is not only because of the economic and welfare benefits arising from them but also for the need to address the tensions and dilemmas they pose to traditional economic systems, patterns of production and labour.

Aware of this context and the challenges it presents, the PA recently launched a roadmap for its Digital Agenda focusing on four main pillars: (i) digital economy; (ii) digital connectivity; (iii) digital governments; (iv) digital ecosystems.  The PA proposes an ambitious goal towards the creation of a regional digital market. The PA members commit themselves to the development of an internationalisation strategy for their IT industries and digital entrepreneurs. The content and scope of this strategy on a regional level is yet to be defined.

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NAFTA parties decided last week to hold only one extra round of negotiations before the end of 2017, after previous announcements that seven rounds would be carried out before the end of this year.  The decision was motivated by a stalemate reached during the fourth round of negotiations when some proposals made by the US were not well received by its Canadian and Mexican counterparts. The WTO-minus proposals made by US negotiations raised concerns over the likely success of the renegotiation process. Other controversial proposals included a sunset clause for the renewal of the agreement every five years, the elimination of the investor-state dispute mechanism and the more stringent rules of origin.

Photocredits: Ikpro/FreeDigitalPhotos.net
However, it is not likely that it would be Canada and/or Mexico who would put an end to NAFTA with a very thorny road ahead. Withdrawal from the US is also remote. Extensive legal debates on the matter include whether the US president could withdraw from the agreement without congressional approval and how far the executive’s powers go regarding foreign affairs relations.  An arsenal of legal and judiciary tools will be ready to prevent and block such an outcome (see CRS).

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The reinvigorated interest of closer relations with the PA by some of the observer states is partly attributed to the uncertain future of the TPP. With a grey cloud over the TPP,  the negotiating countries are hoping to update and expand their network of commercial agreements through new channels. It is not a coincidence that, except for Colombia, the rest of original members and all the potential associate members were previous TPP negotiating parties. It would not be a surprise that they would attempt to capitalise on the issues already agreed on the TPP table when negotiating their associate member agreements. I will discuss here some concerns around the future negotiations.

Firstly, as the Pacific Alliance members and the candidates to associate members have started the negotiating process for future commercial agreements of ‘high standards’ it is timely to examine what the original PA members have in mind to put real content into an agreement of this kind. It is necessary to set the expectations and offensive interests that the PA members will put forward as a group rather than individually. Hopefully, the association agreements would be more than a form of a TPP-minus accord, where the concessions made in response to the US pressures in the context of the TPP would be withdrawn from these association agreements, and the rest will be kept untouched in the form of informal diffusion of TPP rules.

It would also be important to set a standard as to how the PA will push to incorporate disciplines in the areas of cooperation that are of interest for the mechanism: (i) movement of persons, (ii) education, (iii) trade facilitation, (iv) science technology and innovation and SMEs.

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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.

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