July 2017

By Daniel P. Erikson

Ever since the era of the historic liberator Simon Bolivar, Latin America has been searching for successful regional integration models, with mixed results. That is why the quiet success of the once obscure but newly influential Latin American trade bloc called the “Pacific Alliance” has attracted increasing attention since it was first launched in 2011 by Mexico, Chile, Colombia, and Peru.

Rather than subscribe to grandiose schemes of continental integration, or deeper political union, these pragmatic, trade-friendly countries instead focused on nuts-and-bolts issues like harmonizing existing free trade agreements, lowering tariffs, and eliminating visa requirements. This results-oriented approach, coupled with frequent presidential summitry, soon attracted wide interest, with eventually more than fifty countries (including both China and the United States) signing on as observers. Some analysts are predicting a new core group that can help to advance the aspirations of the currently defunct Trans-Pacific Partnership. 

Last month, Colombian President Juan Manuel Santos hosted the 12th Pacific Alliance Summit on June 29 and 30 in Cali, Colombia, joined by his counterparts President Michelle Bachelet of Chile, President Pedro Pablo Kucynzki of Peru, and President Enrique Pena Nieto of Mexico. The combined population of the four Pacific Alliance countries totals 225 million people, and they collectively represent the world’s eighth largest economy and nearly 40 percent of the GDP of Latin America and the Caribbean. The four nations within the Pacific Alliance have already established a free trade framework, enhanced labor mobility, and are considering the development of a common passport.

The June summit was especially notable, however, because the presidents carved out a new membership category of “associate member states” that will allow them to more proactively engage with observers who are ready to get off the sidelines and begin to strike trade deals with the Pacific Alliance as a group. The first four associate members will be Canada, Singapore, Australia and New Zealand, but more are sure to follow. President Santos described the move as a way to create a new level of synergy with observers that will enable them to “affiliate in some way with the four countries that have the most dynamic economies in Latin America.” President Bachelet underscored her desire to serve the purpose of “consolidating and expanding integration as an instrument of economic development.” Australia and New Zealand, for their part, wasted no time in moving ahead; on July 7, Australia and New Zealand announced their intention to pursue free trade talks with the Pacific Alliance bloc of nations.

With this step, the Pacific Alliance has moved beyond its status as a Latin American novelty and towards becoming a potentially much more influential trade bloc, with its expansion driven in part by the uncertainties surrounding TPP and NAFTA. This new paradigm of trade agreements represented by the Pacific Alliance may have its limits, but for the moment the future is full of growth opportunities.