20th February 2014
Businesses in Latin America are gearing up for major changes as Mexico, Chile, Colombia and Peru agree a deal to end nine-tenths of tariffs on goods and services traded among them. The Pacific Alliance nations announced the landmark trade deal at a meeting of the bloc in Colombia this month, where it was also revealed that Costa Rica would become a full member.
The deal, which eliminates tariffs on 92 per cent of trade between the countries, strengthens the bloc’s position alongside the Mercosur pact group, which is made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela.
"This translates into more investment, more competitiveness and as a consequence, more employment, and good quality employment. This is the fundamental purpose of this whole exercise," said Colombia's president, Juan Manuel Santos.
Founded in 2011, the Pacific Alliance consists of four of Latin America's biggest economies, which together account for 50 per cent of the region's total exports and more than one-third of gross domestic product.
It is focusing on growing free trade, with an eye on new markets across the Pacific as much as between Latin American nations. Indeed, one of its stated aims is to “become a platform for … economic and trade integration … with a special emphasis on the Asia-Pacific region”. The alliance is an expansionist body that seems at odds with the protectionist policies of Mercosur.
The meeting also saw the announcement that Costa Rica is to become a full member of the bloc, dependent on it meeting a set of criteria and complying with a series of steps, including having trade agreements with each of the other member countries.
“After having met the established guidelines and commitments, a working group composed of representatives of member states will evaluate and review compliance with the requirements for admission to this country,” the Pacific Alliance said in a release. Thereafter, ministers from the existing members will make a decision on acceptance.
Panama and Guatemala are also looking at joining the alliance of nations.