LegiStorm

Summary:

The Pacific Alliance is a regional integration initiative formed by Chile, Colombia, Mexico, and Peru on April 28, 2011. Its main purpose is for members to form a regional trading bloc and forge stronger economic ties with the Asia-Pacific region. Costa Rica and Panama are candidates to become full members once they meet certain requirements. The United States joined the Alliance as an observer on July 18, 2013. The United States has free trade agreements with all four countries and has significant trade and foreign policy ties with the region. The Pacific Alliance is of interest to Congress because of the role of the United States as an observer country and also because of the strong linkages between the United States and the member countries. It may also be of interest to Congress in the context of the proposed Trans-Pacific Partnership (TPP) agreement. Three of the four Pacific Alliance member countries are parties to the TPP. The Alliance was officially created when the heads of state of Chile, Colombia, Mexico, and Peru signed a Presidential Declaration for the Pacific Alliance, now known as the Lima Declaration. The objectives are to build an area of deep economic integration; to move gradually toward the free circulation of goods, services, capital, and persons; to promote economic development, regional competiveness, and greater social welfare; and to become a platform for trade integration with the rest of the world, with a special emphasis on the Asia-Pacific region. One of the requirements for membership is that a country must have free trade agreements with all other member countries. The four member countries have embraced free trade as far back as the 1980s and have multiple free trade agreements with many countries, including the United States, Canada, China, and the European Union. They represent 37% of Latin America's population, 35% of its total GDP; 46% of its exports, and 50% of its imports. Mexico accounts for much of the economic strength of the group, representing 61% of the combined gross domestic product. Observer countries play an important role within the Alliance. Being an observer country may help a country better understand the issues being negotiated and also provides opportunities for participation in activities such as trade forums and educational seminars. The Alliance has 42 observer countries, including the United States, Australia, Canada, China, several Central and South American countries, numerous European countries, Israel, Japan, Turkey, and others. The Alliance's approach to trade integration is often looked upon as a pragmatic way of deepening economic ties. It is more outward focused than other regional initiatives such as the Common Market of the South (Mercosur). Another unique characteristic is that the four member countries share similar economic and political ideals and are moving forward quickly to accomplish their goals. Member countries have signed various agreements to share use of their facilities or embassies and consulates to further advance the objectives of the integration process. In February 2014, Presidents of Pacific Alliance countries signed the Additional Protocol of the Framework Agreement, which immediately eliminated 92% of tariffs among members. Some analysts see the Pacific Alliance as a potential rival to Mercosur and have noted that it could put pressure on other Latin American countries to pursue more market-opening policies. The Alliance has a larger scope than free trade agreements, such the proposed TPP, since the Alliance involves the free movement of people and includes measures to integrate the stock markets of member countries.