Political Risk Latin America Blog @PolRiskLatam

Pacific Arc Deepens Integration between Chile, Colombia, Mexico, Peru

Posted in News and Articles, Political Risk by politicalrisklatam on April 26, 2011

by David Gacs for Americas Society / Council of the Americas, April 25th, 2011.

With Brazil, Latin America’s economic giant, increasingly looking globally for its political and economic ties, several of the region’s other countries are banding together to create a robust economic alliance. One plan up for discussion this week in Lima is the Pacific Arc agreement, which will see Chile, Colombia, Mexico, and Peru sign an extensive economic integration pact. Then, come May 30, Chile, Colombia, and Peru will merge their stock exchanges to create the Integrated Latin American Market (known as MILA for its Spanish acronym). Not only will these plans complement countries’ bilateral pacts and membership to other Pacific trade treaties such as the Asia-Pacific Economic Cooperation (APEC) group and the Trans-Pacific Partnership (TPP), but they are also likely to spur stronger competition through greater economies of scale.

Following a presidential mandate spearheaded by Peru’s Alan García on December 4 at the twentieth Ibero-American Summit, the commerce ministers of the Pacific Arc countries met with Chilean Foreign Minister Alfredo Moreno in Santiago in January to discuss moving forward on an Area of In-depth Integration (AIP). Chile will act as pro tempore secretariat in the initial stages. This bloc’s principle function will be to facilitate the passage of goods, services, capital, and people between the member states. Several countries already either share or plan to share trade offices in Asia, a major area of expansion, and the Pacific pact will consolidate and strengthen this trade front. Moreover, Chile, Mexico, and Peru are APEC members (Colombia is currently lobbying for membership) with established trade ties to major Asian economies. Chile and Peru are also members of the TPP, a multilateral initiative under negotiation that seeks to build Pacific Rim trade relations. (continue reading… )

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