1. The Pacific Alliance: Building a Pathway to the High-Hanging Fruits of Deep Integration

A couple of preliminary assessments have tackled the institutional design of the PA, stressing that developing a supranational regime is a prerequisite for success. Both take as a template the European Union, without giving careful consideration to the contextual and historical issues that have prevented proper implementation of supranational models of integration in Latin America, despite previous attempts within the framework of the Andean Community, the Caribbean Community and the Central American Integration System.

The concept of deep integration, which traditionally refers to economic and commercial integration, was first used by Robert Laurence to distinguish between different types of regional trade agreements – shallow integration and deep integration. Shallow integration refers to agreements that deal with border issues preventing trade between two parties, while deep integration refers to agreements that deal with behind the border issues. They include disciplines such as services, movement of factors, harmonization of regulatory regimes, environmental standards, and domestic policies that affect international competitiveness. The first example of an agreement of the deep integration type in the Americas was the North American Free Trade Agreement (NAFTA) and academics have suggested that regional trade agreements North–South tend to follow a model of deep integration, while South–South agreements are primarily shallow in character. The PA challenges this proposition.

The first presidential declaration mandates the ministers of foreign affairs and foreign trade of the member states to negotiate a draft for a Framework Agreement for the Pacific Alliance on the basis of the ‘homologation’ of the existing free trade agreements among the member states.

In addition the Commercial Protocol includes various commitments on transparency across the disciplines including: Article 6.9, Article 7.8, Article 8.8 and Article 9.8.

The arbitral procedures between an investor of one party and another party only apply in regard to the provisions of Section A in Chapter 10 (Investment). No other provisions of the Commercial Protocol allow for arbitration between parties other than the member states under the Protocol.

In accordance with the Puerto Varas Declaration of the XI Presidential Summit, negotiations were concluded in 2016 on an additional annex to the Technical Barriers to Trade chapter that covers provisions regarding organic products and medical devices. The Cali Declaration of the XII Presidential Summit in 2017 also announced the conclusion of another annex on technical barriers to trade for food supplements.

In cases of inconsistencies between treaties regulating the same subject matter, Article 30 of the Vienna Convention on the Law of Treaties (VCLT) will apply. This provision prescribes that:

2.

When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail.

 

3.

When all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty is not terminated or suspended in operation under article 59, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty.

 

4.

When the parties to the later treaty do not include all the parties to the earlier one:

(a)

as between States parties to both treaties the same rule applies as in paragraph 3;

 

(b)

as between a State party to both treaties and a State party to only one of the treaties, the treaty to which both States are parties governs their mutual rights and obligations.

 

 

Note that the guidelines provided by the Directorate of Institutional Legal Affairs at the Ministry of Foreign Affairs of Colombia specify, as a matter of good drafting practice, that the agreement should establish the effect of the corresponding agreement on pre-existing agreements, for example through derogation, subrogation or declaration of pre-eminence of one over the other in case of incompatibilities (Ministerio de Relaciones Exteriores de Colombia).

According to the XIth Presidential Declaration (Puerto Varas Declaration), two technical groups on Environment and Green Growth, and a Labour Group should be established. An additional subcommittee on the digital agenda has also been established together with a road map for its activities. Although the Labor Group, and the Environment and Green technical groups are incorporated in the institutional chart it is not yet clear what topics are being discussed or what the work programmes are for these two technical groups. Recently created groups include one on gender-related issue whose mandate is to develop a strategy for mainstreaming gender considerations into the work programmes of PA technical groups. There is also a technical group on cultural issues with an initial focus on the promotion of creative and cultural industries. In parallel, the Council of Ministers of Finance develops its agenda through additional groups on: infrastructure; financial integration; services trade; and catastrophic risks. Notwithstanding the establishment of all these working groups the PA is also undertaking works on fisheries and aquaculture, health and access to medicines, and consumer protection.

The CEAP has representation in each member state and is formed by four business people per country. It has an advisory role, formulating recommendations to the governments and business unions about the PA including on how to enhance cooperation among the member states (CEAP 2012). It promotes common actions in the business community to encourage the development of third markets, especially in the Asia Pacific region.

The CEAP Declaration of December 2014 includes recommendations that encourage further negotiations on capital markets integration and superannuation funds, as well as air services.

It provides for the creation of a Regulatory Improvement Committee.

For instance, although the Xth Presidential Declaration stipulates the creation of a working group on mining development, social responsibility and sustainability, the last two are also cross-cutting issues in relation to the promotion of investments in general, and, more broadly, are components of the sustainable development pursued by the PA. Activities in these two areas currently seem to be concentrated in the mining sector. Coordination will also be needed between the Technical Group on Services and Capital and the groups on Innovation, Education, and the Mobility of Persons, including with regard to cross-cutting issues with the SMEs Group and the Digital Agenda Sub-Committee.

The PA represents the second-largest securities market in the region in terms of capitalization and trading volumes (Cordoba 2015), close behind the Brazilian stock market – Bovespra. However, in terms of the number of listed companies, MILA is the top securities market in Latin America (George 2014), MILA has operated in secondary trading of equities since 2011 and is progressing towards additional types of operations in debt markets and derivatives (Cordoba 2015).

Campa and others reflect on the need to complement market forces for financial integration with policy action providing short-term and long-term recommendations for public policy action.

There were plans reported for sharing commercial representation in Sydney (Australia) and New Delhi (India) but they did not appear to be in operation at the time of writing.

These agreements have resulted in specific accords regulating the sharing of diplomatic offices between Colombia and Chile in Azerbaijan, Ghana, Algeria, Morocco and at the Organisation for Economic Cooperation and Development (OECD). Specific agreements are in place between Mexico and Colombia on the use of diplomatic offices in Azerbaijan, Ghana, and Singapore. And Peru and Colombia have agreed to share embassy facilities in Vietnam and Ghana. These agreements relate primarily to the sharing of the physical infrastructure and buildings, while each member state retains independent diplomatic/consular delegations. The member states also have an inter-institutional agreement between their ministries of foreign affairs to cooperate and provide consular assistance to nationals of other member states when the member state of origin has no consular representation in the host country.

The Network has been working on a project to be concluded in 2017 to monitor new-generation biodiversity to support adaptation processes and climate change mitigation.

One example of such cooperation is the technical assistance provided by PA member states whose sanitary authorities have attained National Regulatory Authority Level IV to the authorities of other member states that have not yet attained such certification.

Greene and Arnson (2016) observed that trade has decreased across multiple sectors within the PA since 2013. Moreover, little success is reported in improving intra-industry trade, which decreased between 2014 and 2015. However, in terms of exports to other PA members and intra-industry trade, Peru showed positive results for the period 2013–2014.

The relevance of the trade with China and other Asian counterparts varies significantly from member to member.

In 2013 the exports of goods from the PA to China were 40% of the total imports of goods from China to the PA.

While exports from the PA member states to ASEAN stood at USD 3,8 billion in 2014, exports of goods from ASEAN to PA member states reached USD 12,8 billion (Observatory Latin America-Asia Pacific 2016).

Observer status is currently held by the following 52 countries: Uruguay, Paraguay, Ecuador, Panama, El Salvador, Costa Rica, Dominican Republic, Guatemala, Honduras, the United States, Canada, New Zealand, Australia, South Korea, Japan, People’s Republic of China, Turkey, France, Spain, Portugal, Trinidad and Tobago, Morocco, India, Israel, Singapore, United Kingdom, Switzerland, Italy, Germany, Finland, Belgium, Netherlands, Austria, Denmark, Georgia, Greece, Haiti, Hungary, Indonesia, Poland, Sweden, Thailand, Argentina, Czech Republic, Norway, Slovakia, Egypt, Slovenia, Lithuania, Croacia, Ukraine, and Romania.

Marczak and George (2016) recommend for instance that PA members negotiate as a bloc with ASEAN and other East Asian countries as a way to leverage its impact.

In the case of MERCOSUR, after 9 years of existence members realized that there was a need to develop a social dimension: this was named ‘Mercosur Social’ and includes various organizational structures such as the Social Institute of the MERCOSUR.

Wilhelmy (2013) points out that in the future a more technical body could be required.

Several factors point to a complete and effective control by the members of every single aspect of the PA and its decision-making process in practice (Reparations Advisory Opinion 1949). Moreover, it seems that the limited instances in which the Presidency Pro-tempore could take action relate more to the representation of collective interests of the member than to representation of the interests of the PA (Klabbers 2013). In addition, as stated in the Framework Agreement, every decision taken by the Council of Ministers as well as any other agreement adopted within the PA requires explicit consensus.