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Evaluate the success of The Pacific Alliance in achieving its stated objectives .

Since the 1990s, regional integration within Latin America has undergone several stages and
has presented itself in a number of fashions. These regional organisations, such as the
‘Common Market of the South’ (Mercosur), the ‘Organisation of American States’ (OAS),
and the ‘Community of Latin American and Caribbean States’ (CELAC), have had largely
mixed rates of success. The Pacific Alliance though, is the latest iteration of regional
integration and is thus far largely regarded as remarkably successful. Essentially a glorified
free trade organisation between Chile, Colombia, Mexico and Peru, the Pacific Alliance has
come along in leaps and bounds since it was created in 2012. The Pacific Alliance has the
inherent capability to challenge the status quo within Latin American regional integration. In
the sense of both economic and regional influence, the Pacific Alliance is contesting the de
facto regional hegemony of Brazil. Over the course of this essay, I shall illustrate that the
Pacific Alliance has been largely successful in achieving its stated objectives. Further, I shall
investigate some of the criticisms made of the Pacific Alliance, with a focus on those
criticisms made from within Latin America. Having analysed these criticisms, I shall
illustrate some of the basis for that criticism and whether they stand up to further scrutiny.
Ultimately, I shall argue that the Pacific Alliance has been surprisingly successful in the
initial stages of its development, but that to truly establish whether the Pacific Alliance can
be deemed a success will only be possible given time.

To investigate and evaluate the success of the Pacific Alliance, it is not only necessary to be
aware of the stated objectives of the organisation but also to acknowledge the context of the
formation of this regional integration attempt and thus why it is an important venture in the
global economy. The Pacific Alliance was first proposed, as the ‘Pacific Arch’ by Alan
Garcia, the then president of Peru, in 2006. At that point in time, Venezuela had left the
Andean Community (CAN) and both Ecuador and Bolivia, CAN members, had been
showing more of an inclination towards the Bolivarian Alliance for the Peoples of Our
America (ALBA) rather than CAN. As such, it appeared as if the floundering CAN was
relatively destined to fail and as a result Peru had to search for different means to maintain
trade. To achieve this Peru reoriented economic efforts towards the Asia-Pacific, a strategy
implemented by Chile, Colombia and Mexico. Five years following this proposal by Garcia,
in April of 2011, these states formally agreed to the official launch of the Pacific Alliance.

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On the 6th June, 2012 Chile, Colombia, Mexico and Peru signed the constitutive treaty in
Antofagasta in Chile1. As such, with this understanding of what brought the four states
together we are better placed to understand how successful the Pacific Alliance has been
overall in achieving it’s stated objectives.

Before investigating the objectives of the Pacific Alliance, it is important to realise that the
potential of the organisation stems largely from what occurs when the states unite
economically. Individually these states, other than Mexico, have little economic influence.
Together though, as the Pacific Alliance, member-states have the potential to be a significant
player in the global economy. Together, the countries of the Pacific Alliance have a
combined population of over 200 million and account for 35% of Latin American GDP. In
addition, the member states of the Pacific Alliance represent 50% of regional trade and an
average per capita income of USD 10,000. All of this means that the Pacific Alliance is
effectively the eighth largest economy in the world, as well as the world’s seventh largest
exporter.2 These facts alone are not much to scoff at, but when realised that this market,
largely comprising of a “burgeoning middle-class” who are reaping the “spoil’s of the regions
rapid economic growth over the past decade,”3 has in fact over taken Brazil that it becomes
much more noteworthy. Additionally, the Pacific Alliance receives nearly 50% of Foreign
Direct Investment (FDI) to the region. Furthermore, the four member countries are the fastest
growing states in Latin America, with all four of them recording GDP growth of over 4% in
2013 (Peru managed to grow by over 6% GDP). Noting elements it becomes evident that
together, the economic potential of the Pacific Alliance is significant and it is thus clear why
it has been described as “the most exciting thing going on today in Latin America.”4

The next essential element required to analyse and evaluate the Pacific Alliance is an
understanding of their objectives. The Pacific Alliance has three core objectives which the
four member states seek to achieve. The first objective is to “move progressively towards the
free movement of goods, services and people.” The second aim is to “drive further growth,
development and competitiveness of the economies of its members, focused on achieving

1
Nolte, Detlef, and Leslie Wehner. 2015. 'The Pacific Alliance Casts Its Cloud Over Latin America'. GIGA
Focus International Edition 8. Pg. 2
2
Inter-American Development Bank,. 2015. 'The Pacific Alliance: Consolidating Regional Integration And
Cooperation - Inter-American Development Bank'.
3
'Pacific Alliance Trade Bloc Eyes Global Role'. 2014. Strategic Comments 20 (2)
4
Felipe Larrain quoted in ‘The Growing Pacific Alliance’ The Economist

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greater well-being, overcoming socioeconomic inequality and promote social inclusion of

[their] inhabitants.” The final aim of the Pacific Alliance is to “become a platform of political
articulation, economic and commercial integration and projection to the world, with emphasis
on the Asia-Pacific region.”5 Ultimately the vision shared by the member states of the
Pacific Alliance is that of economic development consisting of “a social market economy, of
entrepreneurship, innovation, private initiative and integration into the world.”6 These
objectives have provided a framework for the member-states of the Pacific Alliance to work
towards greater economic integration and allow us the capability of providing clear goals to
evaluate their success against.

Despite having only been around for just over four years, the Pacific Alliance has been
almost surprisingly successful when all things are considered. Perhaps the area that they have
been most successful in has been the push towards the ‘free movement of goods’ within the
bloc. The Pacific Alliance countries eliminated tariffs on 92% of tariff lines by the end of
2013, with the remaining 8% to be removed gradually in the coming years. When it comes to
the ‘free movement of people,’ the Pacific Alliance is certainly heading towards a successful
evaluation as well. While they have not yet managed to achieve complete freedom of
movement for people between the four countries, they have managed to waive visa
requirements for “business professionals, academics and students who travel and participate
in programs within member countries,” and they are allowed to visit for up to 180 days
without a visa.7 This in turn lowers business costs and reduces the potential of delays,
enhancing the incentives for trade and cooperation between member-states. Furthermore,
they have also eliminated the need for tourist visas for member-state citizens, and there are
also in excess of 400 scholarships offered as attempts to encourage educational exchange and
interaction between Pacific Alliance countries.8 These elements that the Pacific Alliance are
implementing have seen an increase in business deals and tourism between the four
countries.9 These agreements play a significant role in the diversification and, the hope is, in
the future stability of the member-states economically, particularly in the face of the collapse
of the commodities boom. As such, these elements highlight the successes of the Pacific
Alliance in relation to their objectives related to the free movement of people and goods.

5
Alianzapacifico.net
6
Sebastián Piñera quoted in Cloud over Latin America
7
Tomaselli, Wesley. 2015. 'Latin America’s Newest Experiment In Tearing Down Trade Barriers'. OZY.
8
Pacific Alliance trade bloc eyes global role
9
The Economist. 2015. 'How Deep Is Their Love?'.

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The Pacific Alliance can also be termed relatively successful when it comes to their objective
of achieving ‘projection into the world.’ While still too early to establish the economic
impact of the Pacific Alliance in its global relations, all four states have continued working
towards increasing free trade agreements with Asian states. Diplomatically though, the
Pacific Alliance can certainly be termed a success, which could in the future lead to a clearer
definition of whether the Pacific Alliance has been truly successful in terms of economic
projection into the Asia-Pacific, and the world. The Pacific Alliance has sparked such interest
that more than 30 countries have become Observer States. All inhabited continents are
represented in the observer states of the Pacific Alliance including, pivotally, China and the
United States of America. Strong interest from Asia further strengthens the reasoning behind
determining this particular objective a success. At the Cartagena dialogue, March 2015, states
such as Japan, South Korea, the ASEAN states, and Australia all showed keen interest in
establishing greater links with the Pacific Alliance States. In fact, it appears that the Pacific
Alliance is such an attractive prospect that during the Cartagena Dialogue, a number of Asian
states urged the Alliance to admit their countries as full members, due to the attractive nature
of the member-states “commitment to free markets, free trade and democracy.”10 These
elements all point towards the diplomatic success of the Pacific Alliance, particularly in
relation to its projection into the Asia-Pacific and its attractiveness to Asian states.

Additionally, further efforts by the Pacific Alliance member-states may well point towards
continued diplomatic success and greater projection into not only the Asia-Pacific region, but
the world at large. The countries of the Pacific Alliance have begun to open joint trade
missions in a number of states. Chile and Colombia share embassies in Morocco and Algeria,
while Colombia and Peru share on in Vietnam. Most importantly though, the opening of the
joint trade mission in Ghana, shared between all four member-states, is unprecedented and
there are efforts to open another in Turkey and Singapore, providing diplomatic assistance to
all citizens of Pacific Alliance member-states11. This level of integration is beneficial for
those states involved, particularly in their relations with the Asia-Pacific, as it helps provide a
stronger basis for “strong trade and supply-chain links”12 as they increase their presence and
look to continue to further their relationship with the Asia-Pacific and the world. As the

10
ibid
11
Pacific Alliance Trade Bloc Eyes Global Role
12
ibid

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Pacific Alliance looks to maintain and deepen their engagement with the Asia-Pacific region,
the opening of joint trade missions is a clear means by which, diplomatically speaking, the
Pacific Alliance can succeed.

Another important element of integration between the Pacific Alliance member-states, is the
formation of the Mercado Integrado Latinamericano, or the Latin American Integrated
Market (MILA). Initially composed of the stock markets of Chile, Colombia and Peru,
Mexico joined MILA in 2014, providing a significant boost to MILA. The addition of the
Mexican market to MILA resulted in it overtaking BOVESPA, the Brazilian stock exchange,
as the most important stock market in the region, increasing its market capitalisation to over
USD$1.25 trillion. For investors, the Pacific Alliance has been eye catching because of the
“optimum growth of the region and the liberalisation of its economy and its market in recent
years.”13 This is gaining significant international attention thanks largely to “macroeconomic
stability, low risk rating, and a variety of external economic factors”14 that have set the
Pacific Alliance on the path to becoming “a key player in the current global economy.”15
Evaluating the ultimate success of the MILA, you eventually come to the same conclusion as
you do for the wider Pacific Alliance. It is still early days for the Pacific Alliance. The
organisation is young, and while initial signs are very promising, time must be provided for
the array of initiatives to take hold and for the Pacific Alliance to really make an impact upon
the global economy.

Despite the early successes of the Pacific Alliance diplomatically and in fostering the free
movement of goods and people, there is still a relatively significant amount of criticism of the
movement from within Latin America. The criticism of the Pacific Alliance largely comes
from the Latin American Left and Centre-Left. It is perhaps best stated by Ecuadorian
President Rafael Correa, who stated that Latin America was being torn between “two
opposing visions of the world: neoliberalism and free trade versus those that believe in
socialism and the guarantee of rights; those that believe not in free trade zones, but zones free
of hunger and free of poverty.”16 The pitching of the Pacific Alliance as a supporter of
neoliberalism is a powerful invocation within Latin America due to the history of neoliberal

13
Vasquez, Cristobal. 2015. 'Is The Pacific Alliance The Next Big Thing?'. Worldpolicy.Org.
14
ibid
15
ibid
16
Rafael Correa quoted in Cloud over Latin America

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policy under the Washington Consensus and the lingering shadow of Import Substitution
Industrialisation. Argentinian intellectual Atilio Borón furthered this comparison, arguing
that the Pacific Alliance was the “most important piece of the imperialist counterattack,
which is seeking to implement the Free Trade Agreement of the Americas (FTAA) under
another name,” that is was “basically a political-military alliance,” and that “its main
objective is to erode the bloc of South American countries and especially UNASUR”17 (the
Union of South American Nations). Within ALBA as well, there is consternation that “the
strategy of the Pacific Alliance is not just commercial, it is a political and military strategy
[seeking] to reinstall the Washington Consensus and the FTAA.”18 These criticisms of the
Pacific Alliance have arisen due to the initial successes of the organisation, and have led to it
being seen as a rival to other regional organisations, particularly Mercosur.

The apparent rivalry between Mercosur and the Pacific Alliance is one that requires analysis.
Mercosur largely dismisses the Pacific Alliance as an organisation that is essentially
attempting to reintroduce neoliberalism, particularly free trade, back into the South American
region. In 2013 at the Mercosur social summit, the possibility of connections being
established between Mercosur and the Pacific Alliance were strongly criticised, as the Pacific
Alliance is “a proposal that is geared to divide the integration process in the south of the
continent which is advancing in great sustained strides.”19 The Pacific Alliance, on the other
hand, argues that it was “not positioned against anyone or any state in particular.”20 It is
reasonable to suspect though, that the rivalry has become pronounced on the Mercosur side as
the organisation come to the realisation that “trade within Mercosur is not growing, and the
rules of the customs union are protectionist against imports from non-members and hostile to
trade liberalisation.”21 This stagnation, coupled with the dynamic nature of the Pacific
Alliance has seen discontent with the state of Mercosur grow within member-states,
particularly Uruguay and Paraguay. Both states have become observer states of the Pacific
Alliance, and have “expressed high level interest in joining as members.”22 This interest is in
spite of the continued labelling of the Pacific Alliance as a neoliberal tool. Ultimately, it
comes down to the renewed importance of trade and of globalisation in this day and age. For

17
Atilio Borón quoted in ibid
18
Juan Ramón Quintana quoted in ibid
19
Graciela Rodriguez quoted in MercoPress,. 2013. 'Mercosur Social Summit Criticizes The Pacific Alliance
And Blasts Free Trade'.
20
Juan Manuel Santos quoted in Cloud over Latin America
21
de Onis, Juan. 2013. 'Protectionist Policies Stagnate Mercosur Countries'. World Affairs.
22
George, Samuel. 2015. 'Mercosur And The Pacific Alliance: Do Opposites Attract?'. Financial Times.

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mid-sized emerging markets, global integration is a matter of survival in the 21st century.23
As such, it appears that the criticism being levelled at the Pacific Alliance from within Latin
America stems from the threat that it appears to portray to the stagnant Mercosur bloc, and
what that means for their member-states.

The Pacific Alliance, the most recent regional integration attempt within Latin America, has
had initial success in achieving its objectives, despite having only begun in 2012. It has
moved quickly to foster the free movement of people and goods, removing the need for most
visas for member-state citizens and has removed over 90% of tariffs. And while it is still
early to equivocally pass judgement, preliminary signs suggest that they are also taking
significant strides in terms of their engagement and integration with the Asia-Pacific and the
global economy at large. The dynamic nature of the Pacific Alliance, coupled with the extent
of their successes thus far, has resulted in the organisation attracting the attention of the
world. While this success has brought about criticism from within Latin America, being seen
as a rival organisation to Mercosur, the general consensus seems to be that ultimately “the
Pacific Alliance is not a threat to Mercosur.”24 At the end of the day though, the Pacific
Alliance is an economic based initiative. To this point in time, they have seen surprising
success in meeting some of their objectives. It is still too early though to effectively establish
whether the Pacific Alliance has any kind of impact upon poverty and socioeconomic
inequality levels within member-states. As they 21st century progresses, the Pacific Alliance
has significant potential to reshape the nature of Latin American integration and engagement
with the global economy. Only with time can we truly establish whether the Pacific Alliance
is to be deemed a success, but early signs would suggest that they are going a long way to
achieving their stated objectives.

Word Count: 2918

23
ibid
24
Dante Sica quoted in Mander, Benedict. 2014. 'Mercosur Views Pacific Alliance With Unease - FT.Com'.
Financial Times.

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