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Regional Integration in Latin America - The Pacific Alliance a Way Ahead
Featured, In Conversation

The Latin American Services Factory for the Asia Pacific Region: Opportunities for the Pacific Alliance

The Pacific Alliance Blog spoke recently to Juan Felipe Toro-Fernandez, our new contributor to the Blog. We interviewed him about his research regarding the extent to which the Framework Agreement in the Pacific Alliance and the Comprehensive and Progressive Agreement for Transpacific Partnership (CPTPP) could become the pathway to developing “The Latin American Services Factory for the Asia Pacific”.Photocredits: Juan Felipe Toro-Fernandez

Mr Toro-Fernandez is a founding partner and the current legal manager of Kesher Business & Investments, a firm specialising in supporting companies in their internationalisation and expansion strategies in Latin America with a focus on the Colombian market. He is also a lecturer at the Law School in Universidad EAFIT and for other universities in Colombia. Mr Toro-Fernandez holds a Master in International Law, Investments, Trade and Arbitration from Universität Heidelberg and Universidad de Chile.

Mr Toro-Fernandez, how did you become interested in the topic of international investments in the Pacific Alliance?

I chose the topic of international investments in the Pacific Alliance because between 2017 and 2018, I carried out a research project that was part of my master’s degree. I titled the thesis “Normative Convergence Between the Pacific Alliance and the Comprehensive and Progressive Agreement for Transpacific Partnership as a Way of Attracting Investments and Promoting Services Chaining with Asia-Pacific: Analysis and Normative Comparison of both Investment Chapters“.

My goal was to compare and survey the investment chapter in the Additional Protocol to the Framework Agreement of the Pacific Alliance (PA) with the investment chapter in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). I wanted to examine convergence opportunities between both regimes to attract investments and promote services linkages (mode 3, commercial presence) with the Asia Pacific region.

I studied both legal regimes accounting for the origins and background of the investment subject and their legal structure. I endeavoured to compare their legal frameworks and address the question of the extent to which these agreements incorporated new generation investment protections for the investors (and the states). I also questioned whether these legal provisions contribute to attract investments and foster productive linkages in the services sectors between the PA and the Asia Pacific region.

I concluded that both investment chapters corresponded, were similar and therefore converged in terms of international investment standards (new generation clauses) such as non-discrimination standards (National Treatment and Most Favoured Nation), absolute standards of protection for the investors (eg, the Minimum Standard of Treatment, Fair and Equitable Treatment, Full Protection and Security), investment protection standards (eg Expropriation, Compensation and the free transfer guarantee), and Investor-State dispute resolution.

I also concluded that the degree of legal harmonisation and convergence achieved through both agreements allows for attracting foreign investments in Latin America and promoting services linkages with the Asia Pacific region.

What does the notion of a Latin American Services Factory for the Asia Pacific entail?

The third chapter of the thesis aims to examine the extent to which both legal regimes — the PA and the CPTPP — allowed for the promotion of services linkages connected with mode 3 of services supply (commercial presence). This idea was presented under a collaboration scheme that I named “the Latin American Services Factory for the Asia-Pacific.”

I understand “the Latin American Services Factory for the Asia-Pacific” as a business conglomerate, business structures linked to one another in an organised manner through horizontal collaboration schemes/networks. These schemes interconnect to provide services to large companies from the Asia Pacific region.

I also envisioned the schemes as an organised gear of small, medium and large enterprises based on all the PA members. These enterprises will supply services to multinational companies throughout all the stages of the supply chain. These enterprises interconnected around the Factory could also receive capital investments from the multinational companies located in the Asia- Pacific countries under vertical schemes.

Finally, I put forward the idea that the “Latin American Services Factory” for the Asia-Pacific would develop as a regional linkage within the PA under a specialisation model where concrete tasks would be allocated throughout the several stages. The Services Factory should promote services supply not only amongst the PA members but also with countries in the Pacific Rim, emphasising the CPTPP members.

Are the Pacific Alliance countries ready to lead a process to structure and develop such Latin American services factory?

I believe that this is the case. By having such a broad regulatory framework, the PA is prepared to lead and advance these productive linkage types between the members. I also maintain that a broad regulatory framework for the PA allows its members attracting investments from companies located in the Asia Pacific region.

Continue reading

March 10, 2021by Ana Maria Palacio
Editor's choice

What has the Services Sector taught the Pacific Alliance during the Pandemic?

 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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September 22, 2020by Ana Maria Palacio
Publications, Spanish, Working Papers

Services and Investment Regulation in the Pacific Alliance and Mercosur: Convergence to XXI Century Rules?

Abstract:
not available

Resumen:
Aunque los servicios juegan un papel fundamental en el desarrollo de las economías nacionales, su participación en el comercio mundial sigue estando rezagada. La inadecuada regulación a nivel nacional es uno de los factores estructurales que frena su desarrollo. Las disciplinas establecidas en el Acuerdo General sobre Comercio de Servicios de la Organización Mundial de Comercio de 1995 y los principales tratados de libre comercio resultan insuficientes y no reflejan los desarrollos tecnológicos de las dos últimas décadas.

En este contexto surgen los acuerdos preferenciales de comercio mega regionales o de nueva generación que buscan grados de integración más profunda en servicios e inversiones, como el Acuerdo Económico y Comercial Global entre la Unión Europea y Canadá (CETA), el Acuerdo Integral y Progresista de Asociación Transpacífico (CPTPP) y el Acuerdo (aún no concluido) sobre el Comercio de Servicios (TiSA).

Este trabajo analiza en qué medida los regímenes en servicios e inversiones establecidos a través de la Alianza del Pacífico y MERCOSUR responden a los nuevos desarrollos sobre gobernanza de servicios e inversiones de dichos acuerdos de nueva generación. Se concluye que la Alianza del Pacífico ofrece el modelo más actualizado y más cercano a los desarrollos contenidos en estos nuevos acuerdos en comparación con el MERCOSUR, lo cual no sorprende por su reciente fecha de conclusión.

Se observa un proceso de difusión informal de normas en el que acuerdos como el CPTPP han servido de modelo. Hasta la fecha solo se han sentado las bases y se hace necesaria la expedición de regulación secundaria y su implementación por parte de los países. En el caso del MERCOSUR, los avances en la gobernanza regional de servicios reflejan un estancamiento en el progreso durante los últimos siete años, a pesar de que muchas de las disciplinas analizadas hacen parte del Protocolo de Montevideo y los desarrollos posteriores en regulaciones secundarias. La evolución en las diferentes disciplinas es heterogénea. El proceso de incorporación de las normas por parte de los países a los regímenes nacionales representa un cuello de botella, lo que dificulta los esfuerzos de implementación y consecuente impacto a nivel regional.

Author: Ana María Palacio Valencia

Spanish  Title: Marcos regulatorios de servicios e inversiones en la Alianza del Pacífico y MERCOSUR: ¿Convergencia a normas del siglo XXI?

Full Document: Marcos regulatorios de servicios e inversiones en la Alianza del Pacífico y MERCOSUR

 

 

January 9, 2017by Ana Maria Palacio
Reports, Spanish

Report on Services Trade in the Pacific Alliance

Abstract:
Not available

Resumen:
Este estudio presenta una recopilación de las principales normas vigentes que regulan el comercio de servicios de la Alianza del Pacífico – AP. La entrada en vigencia del Protocolo Adicional consolidó las normas vigentes en los países, lo que significa que de haber algún cambio en la regulación de un país, este debiera tender a disminuir las trabas en pos de dinamizar el comercio.
Por lo tanto, el propósito del documento es entregar de forma práctica a los empresarios y el sector público los resultados de la negociación para facilitar la internacionalización de las empresas de la subregión.

1. El propósito de este estudio es entregar información imprescindible para los proveedores de servicios que tienen interés de expandirse a los países de la Alianza del Pacífico.

2. En el presente documento encontrarán las principales regulaciones que actualmente rigen en la AP, en la prestación de servicios transfronterizos, con presencia comercial y mediante desplazamiento de profesionales, en los sectores de ingeniería y tecnología de información.

3. Según las estadísticas de trademap, basada en la balanza de pagos de los países, la subregión presenta una balanza comercial negativa en materia de servicios, lo que abre un área de oportunidad para incrementar la participación en los mercados globales.[…]

5. El estudio presenta la ausencia de uniformidad en las regulaciones aplicables al comercio de servicios, lo que genera una amplia agenda pública en materia de facilitación del comercio para que las empresas de la AP se puedan insertar con éxito en las Cadenas Globales de Valor (CGV).

6. Al analizar las regulaciones se observa la inexistencia de una base común de las normas que rigen las prestaciones de servicios en las distintas modalidades. Esto se evidencia en: (1) en comercio transfronterizo, existen asimetrías en la aplicación del Impuesto al Valor Agregado cuando los servicios se pagan a un no residente situado en el exterior; (2) en presencia comercial, los sistemas tributarios son diferentes tanto para las sociedades establecidas dentro de un país como en las sociedades constituidas en el exterior; regímenes labores distintos, diferentes tratamiento de la inversión extranjera, existen países que presentan mayores facilidades para constituir empresas que otros; (3) movimiento de personas, hay países que presentan mayores restricciones en el otorgamiento de visas y también para el otorgamiento de licencias para ejercicio profesional.[…]

Institutional Author: Observatorio Estratégico de la Alianza del Pacífico, Universidad Católica de Chile
Contributors: Jose Luis Parra, Jorge Sahd, Joaquín Piña, Ana María Palacio, Miguel Alejandro Flores Segovia, Adriana Gallegos Cruz and Óscar Enrique Malca Guaylupo
Spanish Title: Estudio del Comercio de Servicios en la Alianza del Pacífico. Normas Vigentes para Prestar Servicios de Ingeniería y de Tecnología de Información en los Países Miembros
Full document: 2017, OEAP, Estudio sobre Comercio de Servicios en Alianza Pacífico

February 11, 2016by Ana Maria Palacio

Recent Posts

  • Towards a Digital Economy Strategy for the Pacific Alliance?: The Broader Agenda
  • The Latin American Services Factory for the Asia Pacific Region: Opportunities for the Pacific Alliance
  • Academic and Policy Research About the Pacific Alliance: A Snapshot
  • In Conversation: A Collective Identity in the Pacific Alliance
  • On Social Entrepreneurship and the Pacific Alliance: An Invitation

About Editors

Hello my name is Ana Maria Palacio. I have a PhD from the University of Melbourne. This blog is about my thesis project, the Pacific Alliance.

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