The presidents of the “Pacific Alliance” (Chile, Colombia, México, and Perú) met last week in Cali, Colombia, to sign an agreement removing tariffs on 90 percent of their merchandise trade.
This is good news. Congress and the Obama Administration should pay more attention to this trade bloc—one that is considerably more pragmatic and less ideological than others in the region (e.g., La Alianza Boliviariana para América (ALBA), La Comunidad de Estados Latinoamericanos y Caribeños (CELAC), and La Unión de Naciones Sudamericanas (UNASUR)—all of them Chavista).
The Pacific Alliance was launched with the Lima Declaration in 2011 and the Paranal Declaration in 2012. Already the four member countries have moved to free up the movement of goods and services and have dropped visa requirements within the bloc. Chile, Colombia, and Perú have linked their stock exchanges through the Mercado Integrado Latinoamericano (MILA), and Mexico has announced that it will join next year.
This initiative is a significant step forward to synchronize members’ trade commitments and is aimed at enhancing trade with the bloc’s most dynamic partners in East Asia.
The Pacific Alliance numbers speak for themselves. These four economies are the most dynamic in the region, representing more than 40 percent of Latin America’s economy with a market of more than 210 million people—more than one-third of the region’s population. Since 2010, these four economies have grown at a higher rate than their neighbors and have also invested at a greater rate—25 percent of their combined gross domestic product (compared to just 20 percent elsewhere).
Another stand-out feature of the Pacific Alliance is that all four countries are committed to economic freedom and therefore more prosperity for their citizens. In this year’s Index of Economic Freedom, these four economies occupy the top positions in the region and outperformed the rest in practically all the areas of the Index.
In a recent interview, Chilean Finance Minister Felipe Larraín said that “the Pacific Alliance is the most exciting thing going on today in Latin America.” We think so, too. We hope some of their neighboring countries will join this pragmatic and successful effort at trade integration.