On Thursday, July 11, renowned Canadian Latin-Americanist and CSIS Americas Program senior associate Carlo Dade joins us for the presentation of a paper we coauthored on the Pacific Alliance and its future prospects.
The session is timely, as speculations around U.S. entry into the group as an observer are higher than ever.
The group, comprising Chile, Colombia, Peru, Mexico, and—as of its most recent summit—Costa Rica, is fast becoming the hottest topic in Western Hemispheric affairs.
Based on a set of pragmatic, commercially focused goals, the Pacific Alliance endeavors to affect the broad and deep integration of its members’ economies. And in the year since its launch, it’s made fast progress doing just that.
In a time when regional and global economies continue to rebound from the 2008 global recession, the Pacific Alliance countries enjoyed economic growth topping 5 percent last year—even as Mercosur’s economies grew by half as much. In the aggregate, the members make up the seventh-largest economy in the world. And per capita gross domestic product (GDP) is a high US$15,000.
To be sure, the alliance is hardly to be ignored.
Member countries have expressed their interest in U.S. involvement in the group. And given that the group’s membership is based on a set of parallel economic aims combined with a shared commitment to democratic political systems predicated on stability and the rule of law, it would seem like eventual full membership would be a “no-brainer.”
But what are the main issues regarding the United States and its participation in what has been called the “new economic and development engine” of the region?
Q1: What free trade agreements does the United States already belong to?
A1: The United States maintains free trade agreements (FTAs) with 20 countries—12 of which are in the Western Hemisphere.
The country is a participant in several existing and emerging regional efforts, including the North American Free Trade Agreement (NAFTA); its work with the Asia-Pacific Economic Cooperation (APEC) forum; the Trade and Investment Framework Agreement with the Association of Southeast Asian Nations (ASEAN); its recently launched negotiations with the European Union over the Transatlantic Trade and Investment Partnership (TTIP); and its membership in the impending Trans-Pacific Partnership (TPP).
Without a doubt, U.S. membership in the Pacific Alliance would be consistent with its membership in other regional trade agreements.
Q2: What does U.S. involvement in the Pacific Alliance look like to date?
A2: During his visit to Colombia in May, U.S. vice president Joe Biden told Colombian president Juan Manuel Santos that the United States would be willing to join the Pacific Alliance as an observer state—though he left future U.S. membership aspirations ambiguous.
The group recently extended an invitation for U.S. observer status—an invitation that, according to Biden’s comments, the United States is unlikely to turn down.
While full membership may yet be far off, it remains a likely long-run outcome. The United States already meets the full set of prerequisites for alliance membership: a commitment to free trade; democratic governance; political stability; respect for the rule of law; and, most notably, existing free trade agreements with all alliance member states.
A major hang-up for the Pacific Alliance’s current members, though, is the notoriously slow-moving U.S. legislature. The alliance’s members are likely hesitant to involve U.S. lawmakers during the ongoing process of hammering out and finalizing the agreement itself, fearing that delays and alterations from the United States could add fatal drag to the group’s momentum.
Q3: Why should the United States be in the Pacific Alliance?
A3: The justifications for U.S. entry into the Pacific Alliance are abundant.
First and foremost, the Pacific Alliance embodies a set of values the United States has itself championed—both in the region and around the world.
For decades, U.S. economic efforts in the region have focused on the promotion of rules-based trade. An offer of alliance membership, then, would present an opportunity for the United States to reaffirm its commitment to those same principles by joining the group’s effort.
U.S. membership would also add to the Pacific Alliance’s political and economic momentum. By joining, the United States would bolster the legitimacy of the group—though, to the alliance’s credit, the work it’s done thus far has lent it legitimacy all its own.
Accepting an invitation for full membership would, in short, send the message that the United States stands with its Latin American neighbors who are working to further economic liberalization.
Still, many fear that U.S. membership in the Pacific Alliance could prove problematic. The agreement provides for the free movement of people among member countries, and U.S. observers have raised concerns that some may use the agreement to migrate easily to the United States.
Conclusion: The Pacific Alliance is making waves; that much can hardly be denied. The group’s innovative, results-oriented model has allowed it to surge forward in its first year, impressing aspiring members and alternative regional trade organizations alike.
So what’s next? As the TPP and Pacific Alliance—and the U.S.-EU TTIP negotiations—develop, the alliance will inevitably attract still more attention. Brazil, a member of the stagnating Mercosur and long since an unattained target of U.S. free trade efforts, may express interest in membership—indeed, it would be foolish of the South American giant not to be interested. And, with the United States and Brazil as potential future partners in the alliance framework, the group may provide the forum that finally brings the two together on trade.
Given that the Pacific Alliance has among its goals the expansion of trade with Asia, China—that continent’s ultimate commercial prize—cannot be ignored. The alliance framework will likely do well in luring further Chinese investment in and trade with member countries. It is not unreasonable to contemplate, sometime down the road, Chinese participation in the alliance itself as a productive and attainable outcome.
So perhaps, then, imagining a future FTA with the United States, Brazil, and China is not quite so far-fetched as it may initially sound. And if that does come about in the not-too-distant future, it may well be facilitated by a trade framework born and bred in Latin America.
Carl Meacham is the director of the Americas Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Daniela Cuéllar, intern scholar with the CSIS Americas Program, provided research assistance.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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