Chile, Colombia, Mexico and Peru are moving ahead with plans for an “Arc of the Pacific” economic bloc, to integrate large countries along Latin America’s Pacific Rim.
The four nations – undoubtedly among the continent’s most open economies – are looking west to Asia, principally China, and north to the US and Canada.
“We are taking an irreversible step toward profound integration,” President Alan Garcia of Peru said on 23 March during a meeting with his Colombian counterpart, Manuel Santos.
The move “will allow us to link investments, permit free flows of capital, people and services and strengthen growth in the four countries”, Garcia said.
Garcia and Santos invited Chilean President Sebastian Piñera and Mexico’s Felipe Calderon to Lima for a meeting in the next six weeks to move the process forward.
This new union, unlike many other partnerships in the region, has a distinct chance of actually working. The four countries all have free trade agreements (FTAs) with Canada and all have negotiated deals with the US.
The FTA between Colombia and the US still requires approval by the US Congress, but the pace of talks is ramping up after years of delays. The Republican-controlled US House of Representatives has pledged to pass the agreement, which was concluded in 2006.
Peru and Mexico plan to conclude an FTA in April, and Peruvian deputy trade minister Carlos Posada said it would be implemented by the end of July.
“We are close to finishing the agreement. We are waiting for a final response from Mexico on a list of farm products,” he said.
Chile, Mexico and Peru are members of the Asia-Pacific Economic Cooperation (APEC) forum and have pledged to lobby at the leaders’ summit in November in Hawaii for Colombia’s incorporation. APEC is the world’s largest trading union.
Finally, Chile, Colombia and Peru began in January an ambitious effort to merge their three stock markets. The Integrated Latin American Market (MILA), once formed, would be the continent’s second largest bourse after Brazil’s Bovespa.
Civil society groups are questioning what the new bloc will mean for them. Alejandra Loayza, of Peru’s Network for Globalization with Equity, said there are mixed reactions to the idea. “Latin America is looking to Asia and a joint strategy for this is welcome. Our fear is that this route means that these four countries will turn their backs on the region,” she said.
Julio Velarde, president of Peru’s Central Bank, said the Arc of the Pacific plans, as well as free trade agreements, should be encouraged. “Trade openness is one of the most important changes in the past 15 years,” he said.