Protocredits: Alianza del Pacífico

Early this month the presidents of the Pacific Alliance (PA) met in Lima, Peru for their regular yearly summit. The absence of the Mexican president overshadowed the XIV meeting and marked the first time in eight years that a president of the member states did not heed the call. A series of meetings by the ministerial councils and technical groups of the mechanism between 1 and 6 of July preceded the presidential gathering.

The outcomes of the presidential summit include a political Declaration in Support of the Multilateral Trading System that refers to the commitment of the members towards a rules-based system, their support to the World Trade Organization, and their rejection towards protectionist measures that have hindered global economic growth. Members also signed a Declaration for the Sustainable Management of Plastics stating their commitment to undertake specific initiatives to better management practices. Framework agreements for cooperation were concluded with Japan, the Eurasian Economic Commission and the Organization for the Economic Cooperation and Development (OECD).

As customary with the early harvest approach the Pacific Alliance has followed since its inception, the presidents and ministries highlighted the progress of the integration. The works underscored include multiple events hosted under the PA umbrella, such as macro business round-tables, joint commercial and investment promotion activities, the delivery of technical studies and several meetings for the exchange of experiences and good practices. The outcomes also report efforts to reach harmonisation at the normative, operative and technological level.

National agencies in the state members have also signed memoranda of understanding for future inter-institutional cooperation. One of them is an interesting Memorandum of Understanding Regarding Good Governmental Practices and the Development of Cooperation Mechanisms for the Prevention and Fight against Corruption in Public Procurement Systems within the Pacific Alliance. This memorandum represents a typical example of the problem-based approach PA members have followed from the start in the definition of their practical agenda. An approach that seems reasonable, albeit it brings to question the extent to which the PA regional agenda would be able to deliver meaningful results on these broad agenda growing not only in size but also complexity.

Following, the launch of the 2030 Vision in 2018, the presidents celebrated the conclusion of a work plan to pursue the aims envisioned for a more integrated; more global, more connected; more citizen-oriented PA. So far, the scope of the work plan is still unknown since the document is not public, and it is not clear what input from the civil society and other stakeholders was received for its construction.

Moving forward, the presidents instructed the working groups with a long list of mandates to undertake activities in areas such as trade facilitation, SMEs; public procurement; financial integration; trade, investment and tourism promotion; regulatory cooperation; global value chains and productive linkages; innovation; services and capital; tourism, labour, education; gender; and culture just to mention a few.

However, a close examination of these mandates make it evident a need for more stringent monitoring mechanisms of the activities undertaken to accomplish them. Although it is clear that some of these mandates are far-reaching and could not be achieved in the short-term, a few questions arise from the practice of presidential mandates.

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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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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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photocredits: Theodore C (CC BY-ND 2.0)  license

As Colombia starts its pro tempore presidency of the Pacific Alliance for a year, it seems timely to examine the road ahead and how its presidency could contribute to progress on the already populated agenda of the PA. This post is the first of a series of contributions that will tackle relevant issues that could be targeted as future works for the mechanism.

It is worth mentioning the multiple areas and topics in which the PA is currently working that make it difficult to map out the actual activities and progress in each of them. As it is reported in its website  (alianzapacifico.net) there are currently 20 technical groups and one subcommittee working on topics such as: digital agenda, innovation, public procurement, gender, cooperation, culture, tourism, SMEs, intellectual property, education, mining development, services and capital, public procurement, trade and integration, communications strategy, expert group on the CEAP, promotion agencies, regulatory improvement, international fiscal transparency, movement of persons, and external relations. The establishment of two more groups one on labour and the other on green growth and the environment was also envisioned in presidential declarations. However, up to today, it is not clear if the latter two groups have been established although the Cali Presidential Declaration provides for actions regarding green growth and the environment. Notwithstanding these works the PA is also undertaking joint activities on fisheries and aquaculture, health and access to medicines, and consumer protection.

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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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Photocredits: 7Crafts/FreeDigitalPhotos.net
This week the Pacific Alliance Council of Ministers announced the approval of the guidelines for states to become associates of the PA. The move is a response to the persistent interest that some of the observer states have in the mechanism and a push to move forward with economic and political relations with those observer states of ‘higher interest’.

The brief guidelines outline the requirement that, to become an associate state, the candidate should conclude a mandatory economic and commercial agreement with the four PA members that follows ‘high standards‘.  Although the guidelines are rather vague as to what constitutes a high standard agreement it seems to refer to the disciplines that shall be covered, including trade in goods, services and investment. It is also an underlying requirement that the agreement encourages openness and market integration along with its alignment with the general objectives of the PA.

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While President Trump has recently withdrawn from the TPP Agreement, not yet ratified, and announced his interest in negotiating on a bilateral basis any commercial agreement, the Pacific Alliance has made an interesting political move.  The PA has called for a meeting to take place 14-15 March in Chile.

The purpose of the meeting is gathering not only foreign affairs ministers of the TPP negotiating parties but also China, South Korea and Colombia. Although no formal commitments are expected from the ministerial summit, it will provide a forum for Asian and PA countries to discuss ways to move forward in the economic front while counter-reacting to the protectionist narrative of recent months in the US.

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Abstract:
Latin American regional blocs face the challenge of finding a new system for international insertion. Mercosur and the rest of the regional blocs do not meet the real needs of global trade and economy. If governments fail to find effective solutions to the structural challenges posed by the new global context, Latin American integration will become isolated under any international context (Mercosur, UNASUR).

Political, economic and financial mechanisms need to be modernised because integration is crucial. Still, such integration needs to address more than just the economic aspect: it is also necessary to improve the living standards in each country, to strengthen democracy and to support self-determination in the region. Special consideration must be given to the Asuncion Treaty, which lists as its primary object “to strengthen development ensuring social justice.”

If governments continue prioritising only the economic aspect, the integration will suffer under the fluctuations of more developed economies. Since 2015, the Mercosur-Pacific Alliance duality has been one of the priorities to drive integration, as it provides an opportunity to boost development and expansion in regional economies. Entering into agreements with the European Union would also be beneficial, but these are more difficult to achieve. While this paper does not deal with this particular topic, it is one of the significant challenges and questions to be addressed by Mercosur as a whole.

Resumen:
Los bloques regionales latinoamericanos deben enfrentar los retos de buscar un nuevo sistema de inserción internacional. Es claro que el Mercosur y el resto de los bloques regionales no están a la altura de las necesidades reales de la economía y el comercio global. Si los gobiernos no dan respuestas ciertas a los desafíos estructurales que impone el nuevo contexto global, la integración latinoamericana sufrirá un aislamiento bajo cualquier contexto internacional (Mercosur, UNASUR).

Es necesario modernizar los mecanismos políticos, económicos y financieros, ya que la integración es una herramienta fundamental, pero no solo es económica, sino también es necesario elevar el nivel de vida de los países, fortalecer la democracia y también consolidar la autodeterminación de los países de la región. No hay que olvidar el Tratado de Asunción, el cual establece como objetivo primordial “fortalecer el desarrollo, con justicia social”; mientras los gobiernos prioricen solamente los aspectos económicos, la integración sufrirá los vaivenes de las economías con mayor desarrollo. Desde el 2015, la dualidad Mercosur-la Alianza del Pacífico es una de las prioridades para impulsar la integración y para generar un mayor desarrollo y expansión de las economías de la región.

Otro aspecto para no descartar, pero muy difícil de lograr, son los acuerdos con la Unión Europea. Si bien en el presente trabajo no está planteando este tema, se considera uno de los grandes interrogantes y desafíos que deberá lograr el Mercosur, en su conjunto.

Author: María de Monserrat Llairó
Spanish Title: Los nuevos desafíos y ejes de poder de la integración latinoamericana: la dualidad Mercosur – Alianza del Pacífico (2010–2017)
Full Document:2019, Llairó, New Challenges and Power Axes of Latin American Integration- Mercosur – Pacific Alliance Duality