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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

Abstract:
The entry into force of the Additional Protocol of the Framework Agreement of the Pacific Alliance in May 2016 marked an important step towards the regional integration efforts of its four members: Chile, Colombia, Mexico and Peru. In addition to promoting trade and investment linkages among its members, a core objective of the Pacific Alliance —and what distinguishes it from other regional integration efforts in Latin America— is to serve as a platform for economic and commercial integration between Latin America and the Asia-Pacific. It is, therefore, of particular interest to evaluate current economic developments taking part in modern Latin America and their impact upon these integration efforts.

The data of bilateral flows of trade in goods at the product and sector level, together with the study of trade in services as well as foreign direct investment, reflect the strong links within the Pacific Alliance. It also reveals the potential to further increase its members’ participation in regional and global value chains.

The Additional Protocol will serve not only to eliminate tariffs for nearly 95% of intraregional imports but also to foster economic integration through cumulation of origin and trade facilitation.
The Pacific Alliance faces several challenges in the medium-term. First, it must successfully incorporate Costa Rica as a full member, the first accession since the Pacific Alliance was established.
Further, it must define how to fulfil one of its driving forces: to serve as a bridge between Asian and Latin American countries on both sides of the Pacific.

Authors: José Durán Lima and Daniel Cracau
Institutional author: Economic Commission for Latin America and the Caribbean (ECLAC)
Full document: 2016, Duran & Cracau, The Pacific Alliance and its economic impact on regional trade and investment