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Latin Alliance Looks East

June 7, 2012

The fourth summit of the Pacific Alliance–a pact between Mexico, Colombia, Peru and Chile–kicked off yesterday with the announcement that its four members would sign a free-trade pact designed to increase exchange of goods, services, and people between them.  The move will also, theoretically, allow the four member-states greater leverage in reorienting their national economies towards rising Asia Pacific markets.  “The drive toward free trade,” notes Bloomberg, “contrasts with the slow pace of integration in the four-nation Mercosur trade bloc led by Brazil and Argentina, which hasn’t achieved its goal of a common market more than two decades after its creation.” Through this lens, the alliance can be seen as a counterweight to the increasing protectionism taking hold in the Southern Cone. “Argentina has stepped up its barriers to imports of everything from glassware to kitty litter to protect its industry this year, prompting a World Trade Organization challenge from the European Union. The government says it won’t backtrack.”

But the deal will have other consequences, if it is upheld, that aren’t immediately economic.

At the summit, Peruvian President Ollanta Humala addressed some of the solutions to outstanding issues he had with his southern neighbor, such as the matter of mine clearance on the Peruvian-Chilean border, which jumped back into the headlines last month after an anti-tank mine killed a Peruvian taxi driver at the border. Humala said that the two countries had contracted an NGO, The Norwegian People’s Aid, to clear the area. “What we are doing is working on a joint contract with a company (The Norwegian People’s Aid)  that will de-mine an area that is made up of Chilean territory, part Peruvian territory, and part disputed territory.” Humala said. This “disputed territory” is also under examination by the UN’s International Court of Justice (ICJ) at The Hague. “The issue at The Hague is, by our judgement, on the right path. Peru’s position is a firm one.” Humala said. “Both heads of state made a decision, which was to bring our border dispute to an international court whose verdict both of us have committed to abide by.”

Still, the main thrust of the new agreement is explicitly market-driven. It will be interesting to see in the coming weeks and months the degree to which the four countries follow through on their commitments, as well as how the pact is received in neighboring countries engaged in other, flagging regional bodies such as MERCOSUR or the Hugo Chavez-led ALBA initiative.

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