The Pacific Alliance – Geared for Growth

Chile, Columbia, Mexico and Peru make up the founding states of the Pacific Alliance. Together, they account for around 35% of all GDP in Latin America. The opportunity for trade and economic growth is not to be underestimated here – if these countries were theoretically considered as a single country, or an entity like the European Union, they would be the sixth largest economy in the world.

Ratifying the Pacific Alliance has consolidated the remarkable potential for growth in this corner of the world. With that in mind, it’s no wonder there are already several observer states waiting in the wings. One of which, Costa Rica, was granted approval for membership in 2013 – only two years after the first Pacific Alliance kick-off talks started. Unlike many of their Latin America counterparts, Chile, Columbia, Mexico and Peru are proponents of free market principles – over the last few decades they have embraced foreign investment and put their national finances in good order. The Pacific Alliance is the next step in their economic growth – it has lowered trade barriers, and instigated visa-free travel and a common stock exchange for the founding members, putting the quartet of countries on an auspicious platform from which they can expand their scope confidently.

The Pacific Alliance and Eastern Promise

Part of the expansion is planned to take place in Asia. An original objective of the Pacific Alliance was to promote free trade and economic integration with an “orientation toward Asia”. Clearly then, for Latin American economies, the allure of trade with Asia is strong. And it’s not only the Pacific Alliance members that have recognized this opportunity; there is a raft of trade agreements and pacts in the works that are set to bring the two regions closer over trade. Like the FTAAP – a proposed free trade area of the Asia-Pacific region.

The Pacific Alliance is just one of many pacts and trade agreements involving the emerging markets of Latin America. Here at the GED Project, we examined the impact of mega-regional trade agreements on these markets. You can explore our findings via our downloadable study, ’A Chain Reaction? Effects of Mega-Trade Agreements on Latin America’ – the first in a three-part series.

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