NAM Applauds Critical Step Taken by the Pacific Alliance

By February 11, 2014Economy, Trade

The NAM welcomes this week’s announcement by the Pacific Alliance – Chile, Colombia, Mexico and Peru – that they have signed an agreement to eliminate tariffs on 92 percent of goods. The other 8 percent of tariff eliminations will be phased in over time. The Alliance of these Latin American nations was kicked off in April 2011 and formalized in June 2012. Together, these four countries comprise 210 million people – more than a third of Latin America’s population and more than Brazil’s. Combined they boast an economic output of 35 percent of Latin America and the Caribbean’s GDP and roughly 50 percent of Latin America’s trade flows. The Alliance’s objectives include economic integration and a gradual move towards the free circulation of goods, services, capital and persons. But perhaps one of the Alliance’s primary goals is to deepen the region’s trade ties with Asia, whose markets are rapidly expanding.

This critical first step by the Alliance is substantial and much needed in a region where trade-liberalization has been under attack in recent years. For example, Argentina has broken a number of its core WTO commitments and the United States, Canada and others have a pending WTO case against them. There are also ongoing concerns about Brazil’s use of localization requirements to effectively close its market to U.S. and other exports. The four members of the Pacific Alliance, on the other hand, have long supported the ideals of free trade and market-opening agreements.

The Pacific Alliance is being characterized as a living agreement and Costa Rica has indicated its intention to sign on as a full member. A prerequisite of acceding to the Alliance is having free trade agreements in force with the other members. While Costa Rica has agreements with all four, its deal with Colombia has not yet been implemented. Notably, the United States has observer status, along with 22 other nations, including Germany, Great Britain, and Italy which will not be allowed to join as full members as they fail to meet the second requirement, which is having a coastline on the Pacific.

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