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Blog

The Pacific Alliance Bloc: hopes and challenges for regional integration

Impacto Social Consultores

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By Daniela Fernández de Córdova

The recently formed Pacific Alliance Bloc offers new hope for regional integration among Latin American countries. The traditional and oldest blocs have proven to be obsolete during the past years, mainly because they have prioritized political ideological integration over economic integration. Nonetheless, this new trade bloc is attempting to shift away from the regional trend by promoting economic integration and ties that go beyond it to allow for the consolidation of this bloc. Consequently, the alliance not only entails free trade of goods and service among its members, but also the unification of capital markets, homologation of educational degrees, development of the tourism industry, and the promotion of competitiveness among small and medium enterprises.

Although this bloc is allegedly not based on political ideology, its members—Mexico, Colombia, Peru, and Chile—do share political ideologies and follow similar economic policies. They have all signed free-trade agreements with the U.S., aim to promote market-friendly economic policies and democratic values, and enjoy relative economic and political stability. The underlying assumption is that these similarities will promote a harmonious integration and prevent the rise of discrepancies among member states.

However, it is important to note that if the alliance is to meet its target its very objective may be the source of discrepancies. Currently, economic relations among its members are not very strong.  Trade is limited since its main products are mostly substitutes, as opposed to complements. Thus, increasing intra-regional trade will pose a significant challenge and may be a source of disputes, as has been historically, unless member countries strategize adequately. 

Another important pending point is how much the bloc will expand. So far, Costa Rica, Panama, Uruguay and Paraguay have expressed interest in joining. These four countries appear to share similar political and economic views. Thus, they will most likely not have difficulties joining. However, they will not be able to add much either as a great majority of their produce is similar.

On the other hand, it is unlikely that other South American nations will join. Many critics see the formation of this alliance as a response to the left-winged alliances in the region—Union of South American Nations (UNASUR, for its Spanish initials) and the Bolivarian Alliance for Nations of our Americas (ALBA, for its Spanish initials).  The creation of this bloc further underscores the differences among Latin American countries and may make cooperation among them more difficult.

For example, when Ecuador was invited to join, its left-winged political discourse outweighed the possible benefits of joining. President Correa made it clear that Ecuador –and Latin America- do not need more competition and free trade, but more social justice and cooperation. These differences in ideals did not allow for cooperation among them. ALBA members have made it clear that they do not want their countries to be associated with the Pacific Alliance Bloc, whose members have surrendered to imperialism and capitalism. Businessmen from the current members have also expressed their concern of left-winged countries joining the bloc. They want it to preserve a pristine image in terms of business-friendliness and fear that the participation of left-winged countries might put an end to it. 

Finally, although Brazil would not be a natural member due to its geographic location, even if it were invited to join it would likely continue to work on its own, as it has done so far. Its economic and political interests appear to be somewhat separate from those of the Alliance and it has already made strides of its own to win a share of the Asian market. However, joining could strengthen its position in the region and help it avoid the relevance and leadership it has enjoyed so far in the Southern Cone.   

These views based on political ideologies are shortsighted. As much as each actor has strove to maintain a clear line regarding political ideologies it could lead them to miss out on important opportunities. Maintaining a clear political ideology does not entail not being able to cooperate with actors in the region with different political ideologies in other realms.

For instance, although the Pacific Alliance Bloc is more advanced in terms of human development, it is important to note that both poverty and inequality remain pressing problems, especially in Colombia and Peru. Foreign Policy’s most recent report shows Colombia is still among the world’s most fragile states. As such, they should remain a priority in the political agenda, as in its leftist counterparts. Without a doubt, promoting exports and investment can help alleviate these issues, the role of the state is still fundamental and that more direct efforts are needed to ensure the entire population benefits.

On the other hand, ALBA countries cannot achieve the much sought after “social justice” without a strong, active participation from the private sector. Working with the Pacific Alliance, could send positive signals to foreign investors and allow for investments that can positively contribute to the nations development—directly by catering to the lower end of the pyramid or indirectly by increasing the government’s budget.

Although each day it becomes clearer that Latin America is becoming increasingly polarized, its members should attempt to avoid this. It is important to set aside differences in political ideologies and seek spaces for collaboration. This is an especially pressing need considering the trend the world is now following towards regional integration and increased competitiveness. The promised time for Latin America will not be reached without cooperation from all countries.

It is not necessary to form a huge trade bloc for the entire region, but it is important to seek more spaces for collaboration as oppose to more spaces that pull the region further apart into two blocs. Going to the extreme will not take any of the regional blocs very far. Rather, accepting the differences and recognizing what they may learn from each other and how it may help them to more effectively solve internal issues, could go a long way.

There are high expectations for the Pacific Alliance Bloc to take the necessary leadership in the region towards this end. However, it remains to be seen whether these ideological differences are irreconcilable or if it is possible for these dissimilar alliances to work together.  Although at the moment, it does not seem very likely, the leaders of our countries should no discard this possibility, but learn from mistakes in past attempts towards regional integration, identify and fill niches, and join efforts to face the world as a stronger front.