Chile, Singapore and representatives from nearly 50 countries met at the end of June for the 11 th Pacific Alliance Summit hosted by Chile in Puerto Varas. The number and diversity of participating countries may confuse some to view the gathering as a mini-United Nations meeting. But it certainly was not.
The Pacific Alliance constitutes an innovative pact bringing Chile, Colombia, Mexico and Peru to pragmatically work together to find new ways of economic integration and engage the global economy. The grouping has made remarkable progress since it was established in 2011.
Singapore and others, piqued by the Pacific Alliance’s mission and agenda, have associated themselves as Observers. There are now 49 Observers, including the United States. Seven new Observers were admitted last month. Interest continues to grow.
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Singapore shares the Pacific Alliance’s vision and belief in free trade and supports the promotion of regional economic integration for economic and social development. Singapore was the first ASEAN country admitted as an Observer — in February 2014 — with Thailand and Indonesia joining subsequently.
The recent Puerto Varas Summit in southern Chile marked yet another forward-looking step in the Pacific Alliance’s intent to deepen relations with its partners. At the Summit’s first Ministerial meeting with Observer countries, the top priority areas focused on cooperation around internationalization of small- and medium-size enterprises, education, innovation, and trade facilitation.
At a time when there is fundamental rethinking of the basic tenets of global economic engagement, the Pacific Alliance’s open approach and successful integration offers a perspective of what happens when economic pragmatism takes priority and is center stage. The Alliance has already achieved a number of impressive undertakings, such as the integration of the four national stock markets (the Mercado Integrado Latinoamericano), the removal of inter-Alliance visa restrictions and the launch of joint international trade missions. More such initiatives are anticipated.
For Observer countries and the globael audience, these initial strides of success are real signals that the countries of Latin America are looking beyond their immediate region and ready to engage with the world. Today, the Pacific Alliance is expanding both its commercial and diplomatic relations with its Asia-Pacific partners, demonstrated by the growth in trade and investment and the signing of free trade agreements between the two regions.
This is the Pacific Alliance’s pivot to Asia. The engagement between Latin America and Asia is not new to either region, but it is gaining momentum. Gross trade flows have increased significantly since 2000, amounting to about $500 billion in 2014. Similarly, in the past decade, the number of free trade agreements between Asia and Latin America soared from two to 22, according to the Asia Development Bank Institute.
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These agreements include the Trans-Pacific Strategic Economic Partnership Agreement (P4) to which both Chile and Singapore are signatories, and which has been the cornerstone to the Trans-Pacific Partnership (TPP) agreement, signed early this year by Chile, Mexico, Peru, Singapore and eight other countries. TPP partners account for 40 percent of global gross domestic product and 26 percent of international trade.
Apart from the Pacific Alliance’s economic agenda and free trade agreements, the Forum for East Asia-Latin America Cooperation (FEALAC) is a complementary platform initiated by Singapore in 1998 and brings together 36 countries from East Asia and Latin America to facilitate official dialogues between the two regions on a regular basis.
With the Pacific Alliance’s strong orientation toward engaging the Asia-Pacific, there is scope for more political, trade and economic exchanges to occur between the two regions. A recent report on the Pacific Alliance by the Washington-based Atlantic Council highlights the importance of regulatory harmonization for more sophisticated trade integration to occur. The report also notes that the Alliance has a “unique opportunity” to build on its ties with Asian Observers. The long-term success of this relationship will depend on the Pacific Alliance moving “beyond commodity reliance and toward integration into the intricate supply chains that generate rapid growth and development in Asia’s Pacific Rim.”
This is where the region’s future economic direction lies. The Pacific Alliance sets the path for other Latin American countries to follow in building closer ties with the Asian region. Chile and Singapore will continue their positive and meaningful engagement in the Pacific Alliance, extending beyond the excitement of the recent Summit.
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The Pacific Alliance’s Pivot to Asia originally appeared on usnews.com
