Commentary: Latin America’s Pacific bloc might work

Andres Oppenheimer is a columnist for the Miami Herald.
Andres Oppenheimer is a columnist for the Miami Herald.

While last Saturday’s summit that created a Community of Latin American and Caribbean Countries (CELAC) in Venezuela drew big headlines, a little-noticed meeting of five Latin American Pacific rim countries two days later will have a much greater impact on people’s lives, and on the region’s economic future.

Unlike the CELAC summit, which was full of poetic declarations of regional unity but created no concrete mechanisms for economic integration, the summit of the Alliance of the Pacific — made up of Chile, Peru, Colombia and Mexico, with Panama as an invited observer country — and held Monday at the Mexican city of Merida made a series of concrete agreements that could turn it into the largest and most ambitious economic bloc in the region.

Already, the combined exports of the four Alliance of the Pacific members are larger than those of the Mercosur bloc of South American countries led by Brazil and Argentina.

The presidents of Mexico, Colombia, Chile and the foreign minister of Peru — who represented President Ollanta Humala, who didn’t participate in either summit because of a domestic crisis over a miners’ strike — agreed to sign an agreement at a summit in Chile on June 4, 2012, with a timetable to lift all barriers on the movement of goods, services, people and capital among themselves.

Among the concrete agreements reached at the Alliance summit:

By June 4, 2012, the four participating countries will agree on a timetable for the gradual reduction of customs duties on goods and services, leading to their total elimination by as early as 2020. The presidents will hold three “virtual summits” every two months between now and the June summit to speed up negotiations.

By June 4, 2012, the four countries will agree on a timetable for the elimination of rules of origin within members of the bloc, which, in effect, would allow exporters of all participating countries to ship goods to other member countries without paperwork, as if they were shipping them within their own countries.

Creation of a joint stock exchange. Chile, Peru and Colombia have already launched their combined stock market, known as Integrated Latin American Market, or MILA. Mexico has signed a letter of intent to join MILA.

Creation of joint export promotion offices abroad to save costs and expand their reach. Currently, the four countries respective trade promotion offices participate in fewer than 2 percent of China’s trade fairs. By combining operations, they will be able to increase their presence substantially, and can offer joint export packages capable of meeting the volume requirements of China’s market.

Creation of a common visa that will allow business people from the four countries, and eventually professionals and tourists, to travel without visas within Alliance member countries.

“This agreement is aimed at being the most profound, and most ambitious, of all Latin American trade integration blocs,” Sergio Diazgranados, Colombia’s minister of Trade, Industry and Tourism, told me in a telephone interview.

My opinion: Latin America’s Pacific Rim countries, all of which — except Ecuador — have free trade agreements with the United States and Canada, are trying to form a trade bloc that can serve as a platform for Asian companies to export goods to the United States and Canada.

At the same time, the Alliance member countries want to use the Pacific bloc as counter-weigh to Brazil’s growing clout in Latin America. Mexico, which has lost significant weight within Latin America in recent years, wants to regain some of its clout in the region by becoming the biggest player in the new group.

Whatever the ultimate fate of the Alliance of the Pacific, its economic goals are more ambitious than those of Mercosur, or any other Latin American trade bloc.

I found it very telling that while the Alliance summit was attended by presidents and their economy and trade ministers, the more publicized CELAC summit included only presidents and their foreign affairs ministers. No wonder that the Alliance of the Pacific summit led to concrete economic integration agreements, while the CELAC one did not go beyond long speeches full of empty rhetoric.


Andres Oppenheimer is a Miami Herald syndicated columnist and a member of The Miami Herald team that won the 1987 Pulitzer Prize. He also won the 1999 Maria Moors Cabot Award, the 2001 King of Spain prize, and the 2005 Emmy Suncoast award. He is the author of Castro's Final Hour; Bordering on Chaos, on Mexico's crisis; Cronicas de heroes y bandidos, Ojos vendados, Cuentos Chinos and most recently of Saving the Americas. E-mail Andres at aoppenheimer@miamiherald.com. Live chat with Oppenheimer every Thursday at 1 p.m. at The Miami Herald.

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