The Pacific Alliance: A dynamic business initiative.
Founded with the initial objective of promoting trade and investment between the members and Pacific countries, the Pacific Alliance has the potential to become Latin America’s largest economic and trade bloc. Collectively, the Pacific Alliance countries form the eighth largest economy in the world, comprising 38% of the GDP in Latin America, 50% of the total trade and 45% of all FDI to the region. As we gain momentum as a trade bloc, investors from around the world are looking forward to opportunities for growth. The Alliance countries here today can help investors from Norway seize those opportunities.
The Doing Business report of the World bank ranked the members of the Pacific Alliance in the top countries to do business in Latin America and the Caribbean.
Together with our respective teams, we have identified the following four areas of possible cooperation with Norway:
1. Trade facilitation and promotion
2. Science, technology and innovation
3. Environment, including climate change and ocean conservation
4. Regulatory Improvement
Given that my intervention is mostly about the prospective of the initiative, I will mention three aspects which I consider are fundamental when portraying the benefits of doing business with the Alliance; these are: 1) the dynamism and flexibility with which we conduct business; 2) the public policies enacted that are aimed at growth and an increased trade with partners; and, 3) the expansion of the membership and the growth of the Alliance.
1) The Pacific Alliance is a dynamic initiative with high potential and business projection.
The Alliance was created by states with shared values and constituted as a strategic platform oriented towards modernity, pragmatism, and a strong political will to face the challenges of the international economic environment. With these values in mind, we have been able to evolve and face many challenges, from economic crises to COVID-19, taking the appropriate steps towards the regional integration efforts of its four members.
We are constantly evolving, so in addition to promoting trade and investment linkages among its members, a core objective of the Pacific Alliance —and what distinguishes it from other regional integration efforts in Latin America— is to serve as a platform for economic and commercial integration between Latin America and the Pacific region. The Additional Protocol serves not only to immediately eliminate tariffs for nearly 95% of intraregional imports, but also to foster economic integration through cumulation of origin and trade facilitation.
2) Public Policies: the correct way forward
Our policies and the way in which we do business has paved the road for the liberalization free trade without tax on 92% of products. This landmark figure makes the process importing raw materials from these member countries, transform it and then export it to these same destinations, creating greater opportunities for productive links to consolidate regional supply chains, take advantage of market opportunities.
The pandemic had a big impact on both our society and our economy. Governments in the Pacific Alliance faced a reduction in private capital. These investments, in sectors like infrastructure or innovation, not only promote economic growth, but also undoubtedly raise the quality of life of our citizens.
Pandemic-related travel restrictions pushed the PA to promote the use of digital technologies, implementing a Regional Digital Market Strategy.
Going back to infrastructure, the Pacific Alliance seeks to attract further private capital, under the modality of Public-Private Partnerships (P3s). The PA has adopted guiding principles of PPPs, which will help member countries to promote predictability, transparency, competition, and integrity. We continue to move forward with the Pacific Alliance Infrastructure Fund and projects such as investment in 5G, electric vehicles, the Maya Railroad, amongst many others.
Many investors have P3s in their pipelines; and nowadays, the manner of investing is changing. Before, many investment funds were only reviewing returns; now, there are many other factors that play a role. Many investors are no longer looking at the return on investment only; instead, they want to know if these infrastructure projects will contribute to improve, help or develop communities. Projects that improve quality of life are becoming just as important and fundamental as profitability. Here there are ample opportunities in Latin America.
The economic expectations in the region show us the correct management of the economic policies of each country. Although foreign trade is the key to the growth of each one, it is necessary to recognize the high degree of dependence on the evolution of international prices, which could benefit them as well as harm them, and policies that reduce this risk should be worked on.
Further to that, we are working on trade facilitation mechanisms that will allow for a more competitive market that supports businesses, promotes intra-regional trade of goods and services, and creates a joint platform to promote innovation, entrepreneurship and gender equality.
Just this past month, negotiations have concluded between Singapore and the Pacific Alliance, on an agreement to collaborate on energy, digital economy, infrastructure and urban solutions, port management and logistics, and other areas.
This new Free Trade Agreement is significant in that it establishes a modern, comprehensive, ambitious and mutually beneficial economic partnership that builds on existing agreements between the Alliance and Singapore. Moreover, this agreement could work as a framework for future associations with the Alliance.
It is important to recall that Singapore became an observer state of the Pacific Alliance in 2014, and a candidate associate state in 2017. It is one of the group’s 59 observers.
The Pacific Alliance is inspired to achieve the goal of greater growth while also achieving greater well-being, overcoming socio-economic inequality and social inclusion of their people. For this, the Presidents signed the Pacific Alliance Presidential Declaration on Gender Equality, which is accompanied by a roadmap to identify priority areas for action and goals in terms of economic empowerment to guide the work of the Pacific Alliance in the design, implementation and evaluation of public policies and initiatives to promote the economic and social development of women.
Actions like these have the purpose of eliminating barriers to women’s access to capital and credit; to have measures that ensure that men and women have equal rights and opportunities in the workplace; to increase the regional balance of women in decision-making positions; to increase the regional balance of women graduates in the areas of science, technology, engineering and mathematics.
3) Going forward: the expansion of the membership and development of the Alliance
The future of the Pacific Alliance appears to be broad, with numerous countries slated as potential members. Those not only include the four associate members, whose participation would provide the alliance with a truly global reach, but also the likes of South Korea, Panama and Costa Rica.
- The alliance promises to become a powerful bloc on a global scale. It already counts four of the five best countries for doing business in Latin America among its members.
- Intra alliance exports accounted for US $ 16.5 billion, primarily due to the trade facilitation mechanisms imposed by the
Alliance. Today the AP represents a market of more than 230 million potential consumers. That is why intra-regional trade should be a key factor, as well as connectivity with third markets.
- The Pacific Alliance is a commitment to use integration to promote greater growth, development, competitiveness, and business formation among its members by committing to the progressive promotion of free movement of goods, services, capital and people.
- It will remain the main integration tool for the Mexican Government in the region as it promotes not only our own national interest but also of our partners and neighbors.
- The Alliance brings with it strengths and opportunities that would otherwise not be available for countries in the individual plain. In order to have a solid growth, the PA must continue to support strategies for the future based on two objectives: increasing productivity and streamlining integration. This will of course require many things, including a change in perspectives and market practices; a breakthrough in education, finance and infrastructure, as well as the development of new capacities within both the countries, and the Alliance as a whole.