| MERCOSUR AND THE ALLIANCE OF THE PACIFIC:
THEIR ROLE IN LATIN AMERICAN REGIONAL INTEGRATION
¿Are they opposed or can they be complementary?
by Félix Peña
English translation: Isabel Romero Carranza
Drawing the international attention -and that of the
own public opinion- is a common occurrence in the founding moments of
the integration processes between nations. However, over time, the expectations
generated with the launch of an integration agreement, at least among
Latin American countries, have generally resulted in frustration. The
curve towards disenchantment not necessarily culminates with the respective
process being abandoned but mostly results in the loss of the significance
that was attributed to it in the founding moment.
Hence the importance of the question: What are the factors that enable
to sustain over time the political will of a group of sovereign nations
to associate with a long-term purpose in the context of an integration?
Beyond the initial excitement, that now seems evident
in the participating countries and in others that aspire to participate,
even just as observers, the question that arises then is how sustainable
over time will be the process of 'deep integration' channeled by the so-
called 'Alliance of the Pacific'. It involves questioning whether it will
transcend its undeniable current impact as a successful exercise in 'media
diplomacy'. Perhaps, it may be too early to attempt to answer such a complex
question. We will have to wait and see the specific commitments that are
assumed for the development of the framework agreement signed in 2012.
An issue to follow up closely will be the relations
that are built between the preferential spaces of the Alliance of the
Pacific and of Mercosur. It is a matter of economic interest as well as
geopolitical connotations. It should be noted that the relations of countries
of the Alliance of the Pacific with Mercosur countries and especially
with Argentina and Brazil are very close and transcend trade. Hence the
importance of formulating the question of whether if between both spaces
there will be complementation or, on the contrary, if contradicting views
This is a question that will take time to get an answer
based on solid arguments and not just emotional ones. Among other reasons,
time will be necessary in order to have a clearer idea of which are the
commitments that are finally translated into the space of the Alliance
of the Pacific and to be able to appreciate the true scope of the current
'metamorphosis' of Mercosur, especially those resulting from changes in
its membership, the convenience of capitalizing on the gained experience
and from its adaptation to national, regional and global realities very
different from those of its founding moment.
The presence in Cali, Colombia, on occasion of the VII Summit of the
Alliance of the Pacific (23 May, 2013), in addition to the four members
(Colombia, Chile, Peru and Mexico), of nine 'observer' countries with
high-level representation has been considered a demonstration that this
is 'a process that is drawing international attention' (on this regard
see the informative paper by the Ministry of Trade, Industry and Tourism
of Colombia entitled 'ABC resultados de la VII Cumbre de la Alianza del
Pacífico", on https://www.mincomercio.gov.co/;
see also the document '30 Preguntas sobre la Alianza del Pacífico'
published on http://www.europarl.europa.eu/).
Drawing the international attention -and that of the own public opinion-
is a common occurrence in the founding moments of the integration processes
between nations. For example, it happened in 1969 with the signing of
the Agreement of Cartagena (Colombia), which was the result of a very
strong involvement of the then presidents of Chile, Eduardo Frei Montalva,
and Colombia, Carlos Lleras Restrepo. In its initial stage and for some
years the so-called Andean Group managed to concentrate much international
attention, especially when it adopted, in December 1970, its foreign investment
regime, known as Decision N° 24 (see among other publications the
article by Ernesto Tironi, entitled 'La Decisión 24 sobre capitales
extranjeros en el Grupo Andino" on http://www.revistaei.uchile.cl/).
Then, the decline began with the withdrawal of Chile. After the transformation
into the Andean Community of Nations (CAN) the original enthusiasm was
gradually eroded. However, Colombia and Peru, both participants in the
Pacific Alliance, still remain members of the CAN (on its current activities
and on trade between its partners and with third countries in 2012 see
The high expectations that are normally generated by the launch of and
international integration agreement between Latin American countries have
usually led to frustrations, sometimes very difficult to overcome. Something
like this happened over fifty years ago with the launch of the Latin American
Free Trade Association (LAFTA), then replaced in 1980 by the Latin American
Integration Association (LAIA). The curve towards disenchantment not necessarily
culminates with the abandonment of the respective project but it results
in a loss of the relevance which was attributed to it at the founding
Thence the current relevance of the question: What are the factors that
enable to sustain over time the political will of a group of sovereign
nations to work together within the scope of an integration process intended
to be permanent? From the different Latin American experiences, including
of course Mercosur -which is also currently going through a period where
different sectors of the member countries are manifesting their frustrations-,
there seems to be three factors to consider carefully. One of them is
the ability to adapt the original integration project to the frequent
changes in the political and economic conditions of the member countries
but also in the external environment, both regional and global. Another
factor is the density and quality of the economic and, above all, productive
connectivity that is developed as a result of the commitments made in
the framework of the integration process. And the third factor, strongly
linked to the previous one, is the quality of the ground rules as measured
by their effectiveness (their ability to penetrate reality), their efficacy
(their ability to produce the results that gave rise to them) and their
social legitimacy (their ability to take into account, thanks to the process
of rule creation, the social interests of all member countries, reflecting
thus a dynamic picture of perception of mutual gains). Without the concurrence
of these three factors it is difficult for a voluntary process of integration
-in the sense of systematic joint work between sovereign nations- to last
in time, at least without undergoing profound changes.
Beyond the initial enthusiasm that now seems evident in the participating
countries and in others that aspire to have some kind of connection, even
just as observers, the question that arises then is how sustainable over
time will be the process of 'deep integration' channeled by the so called
'Alliance of the Pacific'. That is, whether it will transcend its unquestionable
current impact as a successful exercise in 'media diplomacy', understood
as that which allows its protagonists to gain space for a while in the
Perhaps, it may be too early to attempt to answer such a complex question.
So far, what is evident is the strong political will that the participating
countries have evinced through a so-called 'framework agreement' signed
on occasion of the Summit of Paranal, in Antofagasta, Chile, on June 6,
2012. More than enforceable legal commitments, this agreement proposes
objectives and expresses the willingness to work together, setting the
institutional framework for doing so (see the text on http://www.sre.gob.mx/).
No wonder it has been made clear that the Framework Agreement is not a
Free Trade Agreement (FTA): 'It is a regulation by which the Pacific Alliance
is created. It defines its goals and the actions to be developed in order
to reach these objectives; it establishes its ruling bodies and the nature
of the instruments that are adopted within it; it allows the possibility
of observer states; regulates the accession of new states and the way
in which it may be amended; and sets rules about its entry into force
and duration'. So what is the difference with an FTA then?: 'In that it
does not impose any obligations for the members of the Alliance in matters
related to the trade of goods and services; investments; the movement
of people; government procurement and dispute settlement; issues that
are currently being negotiated through the relevant technical groups created
for this purpose under the guidance of the High Level Group (HLG) formed
by the Vice Ministers of Trade and Foreign Affairs of the four countries.
Once their negotiation is finished these obligations will be brought to
Congress as a package to be submitted for legislative approval' (on this
regard, see the original Spanish informative document quoted above on
The objectives laid down on the framework agreement are broad and ambitious.
Hence the expression of 'deep integration' that evokes the idea of going
beyond what are the simple free trade agreements. A central aspect in
order to appreciate how far they are willing and able to advance will
be most certainly that of reciprocal trade liberalization, at least if
we take into account the approach that seems to predominate in building
this Alliance. In this regard, what was agreed in the Summit of Cali -as
per the final statement- is that: 'in matters of tariff deductions, the
total elimination of tariffs was defined for the tariff universe. Also,
it was decided that the common 90% of that universe will have zero tariff
once the agreement comes into force and that the remaining 10% will be
deducted as agreed between the Parties'. It also points out that they
agreed to: "conclude the tariff negotiation for the universe of goods
to achieve complete tariff relief within a reasonable time and also, to
finalize the texts of the Chapter on Access to Markets'. According to
the aforementioned briefing paper (the original version is in Spanish
and has been translated for this Newsletter), originated in the Ministry
of Commerce, Industry and Tourism of the government of Colombia, whatever
is agreed will be included in an additional protocol to the Framework
Agreement. It would become effective upon ratification by the four countries.
As is often the case, this could take some time to materialize.
The member countries of the Alliance are already linked with each other
by preferential agreements concluded in the framework of the LAIA (see
the respective texts including the additional protocols and tariff reduction
commitments on http://www.aladi.org/).
So only when concluding the ongoing work to implement what was announced
in the Summit of Cali, we will be able to appreciate what is the actual
additional value of what is agreed in terms of tariff deductions, sensitivity
and exceptions, and safety valves with regard to what is currently valid
between the different pairs of members. It remains to be seen also if
the existing agreements are connected together, including their respective
updates or if, on the contrary, they are inserted into a new single partial
extent agreement within the scope of the LAIA. It will also be interesting
to see what progress is made in the matter of accumulation of rules of
origin. It is not a minor detail to take into account that the four countries
have concluded preferential agreements with the US and the EU. And three
of them -Chile, Mexico and Peru- are taking part of the ongoing negotiations
to establish the Trans-Pacific Partnership (TPP). This is not a minor
But taking into account the objectives of the partners it will be essential
to examine the real extent of the actual commitments that are adopted
in other areas and, especially, in terms of the different regulatory frameworks,
of services and investments, even of intellectual property and public
procurement. These, together with tariff reductions, the elimination of
non-tariff barriers, rules of origin and, among others, of trade facilitation
may have more impact on the idea of turning the Pacific Alliance into
a space for the development of productive chains especially aimed at making
the most of the mega- preferential interregional trade agreements -the
mentioned TPP and also the Transatlantic Trade and Investment Partnership
(TATIP)-, which would connect this area of the Latin American Pacific
with Asia Pacific, North America and also the European space. Could this
be the real reason behind this new alliance?
Another issue to monitor closely is that of the relationships that are
built between the Latin American preferential spaces: the Alliance of
the Pacific and Mercosur. It is a matter of economic interest but also
with strong geopolitical connotations. It should be noted that for several
countries in the Alliance of the Pacific relations at all levels with
Mercosur countries, but especially with Argentina and Brazil, are very
close and transcend trade.
Hence, the importance of raising the question of whether these two regional
preferential spaces will complement each other or if, by the contrary,
contradictory views will prevail. This is a question that has been raised
by some newspaper comments published on occasion of the Summit of Cali
(see for example that by Andrés Oppenheimer, entitled 'Alliance
of the Pacific vs. Mercosur', published in El Nuevo Herald of May 25,
and that of The Economist of 18 May, 2013, entitled 'Latin American Geo-economics.
A continental divide. The region is falling in behind two alternative
blocks: the market-led Pacific Alliance and the more statist Mercosur").
And this is a question that will take time to get an answer based on solid
arguments and not only ideological or emotional ones. Among other reasons,
time will be necessary in order to have a clearer idea of what are the
commitments that are eventually manifested in the space of the Pacific
Alliance and to appreciate the true scope of the present 'metamorphosis'
of Mercosur, resulting especially from changes in its membership, the
convenience of capitalizing on the experience gained since its creation,
and its recommendable adaptation to national, regional and global realities
different from those of the time of its creation.
The Alliance of the Pacific would be the equivalent of a house to be
built. The willingness to do so exists and the plans are being discussed.
The actual construction will begin later, which in turn may be impacted
by the dynamics of change of the external environment. Mercosur is also
the equivalent of a house under construction -the current experience of
the EU shows that this is a constant reality of voluntary integration
processes among sovereign nations- but it already needs to be expanded
and adjusted to the new realities of its owners and the environment in
which they operate.
Both constructions are developed in the broader institutional frameworks
that exist in the region. All of them aim to ensure regional governance
-in terms of peace and political stability- and not only in the economic
aspect. These are, in particular, the frameworks of the LAIA and UNASUR
- and to some extent also that of the CELAC-. Additionally, there are
also regional institutions such as the ECLAC and the CAF-Development Bank
of Latin America, that can play a very useful role in facilitating the
articulation between both integration processes.
How to get both processes to complement each other, generating a convergence
of development and commercial policies and achieving a growing articulation
of transnational value chains? This is perhaps the central question on
which to base the work between Mercosur and the Pacific Alliance from
now on, while maximizing the installed capacity within the scope of the
regional institutions mentioned above.
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Félix Peña Director
of the Institute of International Trade at the ICBC Foundation. Director
of the Masters Degree in International Trade Relations at Tres de Febrero
National University (UNTREF). Member of the Executive Committee of the
Argentine Council for International Relations (CARI). Member of the Evian
Group Brains Trust. More