11:04 | Washington D.C., Aug. 23.
The Pacific Alliance is also an attractive production and export platform. The combined exports of these four countries, nearly $560 billion in 2013, made it the world’s eighth largest exporter, Ambassador of Peru to the U.S. Luis Miguel Castilla affirmed.
The bloc serves to connect Latin America to the rest of the world, particularly the Asia-Pacific region. Member countries are promoting reforms to increase investment and business competitiveness. In the World Bank’s 2015 Doing Business report, they ranked as the top four countries in Latin America.
"The Pacific Alliance is also distinguished by strong support at the highest levels. The Heads of State have regularly met at summits—there have been 10 so far—to provide momentum to the ongoing trade negotiations," Mr. Castilla wrote in an article published by Americas Quarterly.
The bloc is now moving beyond trade issues and on to financial integration, infrastructure investment and public finances. Its work in this area has been complemented by private initiative, which established the Mercado Integrado Latinoamericano (Latin American Integrated Financial Market—MILA) comprising the four countries’ stock exchanges.
With a market capitalization of $902 billion, MILA has already surpassed Brazil’s stock exchange to become the largest financial trading platform in Latin America. It will allow Pacific Alliance businesses to develop their financial growth potential by issuing joint initial public offerings (IPOs) of stocks and bonds, expanding investment alternatives and deepening the financial market.
The alliance also has an agenda of joint export promotion and standardized regulations for pharmaceutical and cosmetic products, tourism, and academic and student mobility.
The Pacific Alliance Business Council, created in 2012, engages private enterprise, and Pacific Alliance members plan to pilot joint embassies and trade offices. The bloc’s future agenda will largely center on developing strategic alliances and increasing supplier capacity and production and supply chain linkages, he indicated.
Interest in the Pacific Alliance extends beyond Latin America. The bloc has 42 observer nations, including the U.S., China, Japan, and several European nations.
The Trans-Pacific Partnership (TPP) is another illustration of Peru’s commitment to consolidating its strategic presence in the Asia-Pacific region. The TPP is an ambitious undertaking. It aims to build an area of free movement of goods, services and capital between 12 countries, accounting for nearly 40 percent of world GDP, 25 percent of world exports, and 28 percent of world imports.
The TPP seeks to lay the groundwork for the Free Trade Area of Asia-Pacific (FTAAP), which would build on TPP and Association of Southeast Asian Nations (ASEAN)-led trade agreements to create the world’s largest open trade and investment area, involving all 21 Asia-Pacific Economic Cooperation (APEC) member economies. As such, TPP is expected to include the latest generation of high standard rules and disciplines in 29 different chapters.
Peru, along with Mexico and Chile, has actively participated in the past four years of TPP negotiations and is fully committed to reaching an ambitious, comprehensive and balanced agreement.
The TPP would spur economic growth and generate employment; build on Peru’s privileged geographic position as a hub for trade with the Asia-Pacific region; bring preferential trade access to five new markets and enhance existing FTAs; boost demand for Peruvian products by an estimated $2.5 billion; enhance service-sector trade and participation of Peruvian businesses in public procurement opportunities; and further integrate Peruvian businesses into Asia-Pacific value chains, significantly boosting Peru’s competitiveness.
Mercosur is yet another economic grouping that complements the Peruvian economy. Peru is an associate member of Mercosur and, since January of 2006, has an Economic Complementation Agreement in force that provides a preferential economic and trade framework with Brazil, Argentina, Paraguay, and Uruguay. Peru is seeking to cooperate with Mercosur countries to further enhance trade and investment.
Peru’s positive experience with FTAs, as well as that of its regional partners, is helping foster a better understanding throughout Latin America that trade is not a zero-sum game. An open trade policy can yield tangible development benefits underpinning employment, enhanced competitiveness and poverty alleviation. There will be trade-offs and adjustment costs that must be addressed through the appropriate complementary economic and social policies, yet the overall positive impact from free trade far outweighs any such costs.
Article made possible thanks to information provided by the Embassy of Peru in the U.S.
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Published: 8/23/2015