The Pacific Alliance in a World of Preferential Trade Agreements

This chapter assesses the current institutional setting of the Pacific Alliance (PA) and draws lessons from regional experience to enhance its institutional design. PA member states have made it clear from the start that they have no interest in developing a complex structure of institutions. However, the demands for growth and deeper integration will require a review of the basic institutional design: decision-making bodies, technical and administrative support, monitoring, and the dispute resolution system. This chapter makes preliminary recommendations for institutional adjustments, informed by reflections on the sequence of integration schemes in Latin America, which are characterized by steady growth followed by stagnation, then crisis, and eventually re-engineering and reform.

The Pacific Alliance (PA) was initiated to promote trade and investment linkages among its four members and to provide a platform for enhanced integration between Latin America and the Asia Pacific region. This chapter addresses both aspects. First, it describes the bilateral flows of trade in goods at the product and sector level, as well as trade in services and foreign direct investment data. The PA’s deep integration ambitions have reached a heightened level of commitment as a result of the entry into force of the Additional Protocol of the Framework Agreement of the Pacific Alliance in May 2016. This step will not only immediately eliminate tariffs on nearly 95% of intra-regional imports, but also foster economic integration through cumulation of origin and trade facilitation provisions. The chapter also examines the potential to increase the region’s participation in global value chains, building upon the existing strong linkages within the integration scheme. In light of the uncertain status of the TPP, the PA may serve as a bridge between Asia Pacific and Latin American countries. Future relations with the countries on both sides of the Pacific are discussed, with the current accession process of Costa Rica and Panama exemplifying the first significant challenge to the PA’s ambitions.

The Pacific Alliance (PA) is one of the most dynamic economic liberalization processes among Latin American nations. The objective of this group is to advance towards regional integration through the liberalization of trade, services, investment and the freer movement of people among its members (Chile, Colombia, Mexico and Peru). This chapter aims to answer the question of whether the PA is a World Trade Organization-plus (WTO+) (i.e. it goes beyond the normal provisions of the WTO agreements) or a WTOx agreement (i.e. it covers issues for which there are no WTO agreements) within specific areas. The areas included in this assessment are: market access for goods, services and foreign direct investment; trade facilitation, government procurement, competition and intellectual property. The chapter concludes that the PA is a new-generation agreement that could be considered a WTO+ agreement in areas such as trade in goods and services, public procurement, trade facilitation and customs cooperation, and it is likely to reach WTO+ in terms of its provisions on intellectual property. The scope of the commitments in areas such as competition, investment and movement of capital, which are WTOx, represents this group’s longstanding commitment towards deeper regional economic integration.

In a world economy in which Global Value Chains (GVCs) have changed the paradigm of globalisation, we have yet to unravel the implications this has for the architecture of trade and investment agreements. The Pacific Alliance has undertaken to become a platform for more effective insertion into the Asian Pacific and global economy, and has forged new paths in ‘deep integration’ that have delivered results in unconventional ways. This chapter takes stock of some of the achievements and potential limitations of the Pacific Alliance from a Global Value Chain perspective, highlighting the importance of mobility for production factors, market access for sourcing and selling, and physical and digital connectivity as core elements of a GVC-guided integration scheme. Despite the virtues of its open regionalism model, the article questions whether the outward integration of the Pacific Alliance may need to be re-balanced with strengthened inward integration efforts.

This chapter has two goals. First, to study the different patterns of regional integration throughout Latin America by analysing two examples of regional integration initiatives (Mercosur and the Pacific Alliance). Second, to highlight the differences and similarities between these two plurilateral initiatives with a specific focus on the analysis of the trade policies. The main argument we discuss is that there are enough reasons to conclude that the Pacific Alliance and Mercosur could attempt convergence in the future. There is no better way to put it than “convergence in diversity” (Muñoz 2014). The main conclusion of this chapter is that, considering the divergent patterns of integration of Latin America, the region needs to rethink its trade, economic and political integration to enable it to become a more active and dynamic actor in the global economy. Given the relevance of the PA and Mercosur for the region, convergence between these initiatives could help considerably in achieving this aim.

This chapter stresses the importance to Costa Rica’s economy of its accession to the Pacific Alliance (PA) and analyses market access negotiation challenges. One of the requirements for accession to the PA is for new members to have existing free trade agreements in place with the PA members. We compare the agreements Costa Rica already has with each of the PA countries in order to identify the sensitive products that may present the greatest challenges in the accession process. One of the difficulties with these sensitive products is to determine how the four separate agreements that Costa Rica has negotiated with each Member of the PA can be converted into a single agreement in terms of the tariff schedule and rules of origin. The chapter concludes that with respect to rules of origin, all preferential trade agreements (PTAs) signed by Costa Rica with PA member states – except for the Free Trade Agreement (FTA) with Chile – have diagonal cumulation of origin and therefore the benefits of market cumulation outweigh the challenges posed by sensitive products. In terms of the tariff schedule, sensitive products are identified in current PTAs. However, if Costa Rica becomes a full member of this economic bloc, the country will benefit from increased market access due to the regional cumulation, as well as from many other commitments beyond market access.

The Pacific Alliance was established to deepen the integration process among its members by speeding up measures for enabling the free circulation of goods and financial flows, the delivery of services and the movement of people across borders. Services have become one of the main work packages of the Alliance, as they are seen as an alternative means for member countries to achieve higher economic growth and development. High expectations characterize the level of ambition and commitments in trade in services. Therefore, this chapter will analyze the services dimension of the Pacific Alliance. A review of the commitments made by PA members in their services negotiations is made, noticing that the Alliance does not seems to represent a big step towards services openness.

The Pacific Alliance (PA) is a trade-liberalizing initiative that is dutifully espousing pre-existing models of services rule-making reflected in, on the one hand, the North American Free Trade Agreement (NAFTA), and on the other, the World Trade Organization General Agreement on Trade in Services (GATS). The services disciplines agreed to date among PA partners draws on both models, presumably drawing on what is considered to be the best elements of each model. This chapter delves on the main problem of such an approach insofar as both models are arguably flawed, no longer reflect the reality of contemporary services trade, nor tackle issues that will be centrally important to the future of PA members’ service sectors and trade in the coming decades. Liberalization prospects in services are today intrinsically linked to cross-border trade, and more specifically to E-Commerce, where market access and non-discrimination issues are no longer the main or sole barriers to cross-border commerce. Meanwhile, cross-border-trade commitments in other sectors are unlikely to be expanded any time soon since the underlying concerns relate more to regulatory issues than to traditional political economy demands for protection. Looking forward, prospects for deepened trade and investment liberalization in services will depend more on the recognition and harmonization of domestic regulation than on the negotiation of commitments in accordance with standard market access and non-discrimination principles. The achievement of a free-movement-of-services objective will remain elusive unless and until Pacific Alliance countries think outside the confines of existing models and negotiate further trade liberalization more along the lines of the mutual recognition principle, provided, again, that PA Members are committed to achieving significant trade and investment liberalization in services.

International Investment Agreements tend to be bilateral, this is no coincidence that historically the first agreements were named Bilateral Investment Agreements. But with the negotiation and ratification of treaties as the TPP, CETA Canada- European Union and the TTIP, multilateral investment treaties are becoming a reality. How to cope between the relation of new and previous treaties between same parties? One option is to terminate the previous and another is to make them coexist. This last option was taken by the TPP and the Pacific Alliance Additional Protocol to its Framework Agreement. This article discusses the reasons of opting for this solution, and specially its legal implications in the Pacific Alliance Agreement. In a first part the bilateral agreements of the Pacific Alliance partners are exposed and compared with the Additional Protocol. In a second part, the risks of the coexistence of agreements for coherence will be assessed. In a third and final part, legal implications of coherence and the legal architecture to avoid conflict of norms will be explained; finally an economic explanation to coherence will be exposed.

This chapter considers where the electronic commerce chapter of the 2014 Pacific Alliance Additional Protocol (PAAP) stands in relation to the global dialogue on regulation of electronic commerce. To frame the discussion, the electronic commerce provisions of a set of preferential trade agreements will be examined. This set comprises the latest United States and European Union free trade agreements, the Trans-Pacific Partnership Agreement and the Trade in Services Agreement. This chapter also looks at whether the current text of the electronic commerce chapter of PAAP contains suitable provisions for regulating new trends in electronic commerce. These new trends are characterized by complex scenarios that include cross-border online marketplaces, the app economy, cloud computing, big data and 3D printing, among others.

Countries of the Pacific Alliance (PA) stand out for their good performance in terms of compliance with international standards on the protection of intellectual property rights (IPRs). However, the low level of innovation and technical sophistication of their productive sectors suggest that their attempts to defend these standards as enabling conditions for a virtuous cycle of technological-driven growth have been unsuccessful. While national administrations have in many cases taken advantage of the regulatory space offered by so-called “flexibilities”, in the existing international framework of IPR, mitigating the effects of the extended rights protection pursued by some stakeholders, the economic logic under which that framework was designed does not seem to take into account the current trends towards global value chains, digital economy, mobility of scientists and the ubiquity of services or the prevalence of foreign direct investment. Underlying this complex scenario is one critical fact: the current deadlock in negotiations within the World Trade Organization (WTO) makes a redesign of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) unlikely. Underlying this complex scenario is one critical fact: the economic logic under which the TRIPS Agreement was designed does not seem to consider the current trends for global value chains, digital economy, mobility of scientists, ubiquity of services and prevalence of foreign direct investments.

This chapter aims to identify the possible challenges that the Pacific Alliance (PA) will have to face with respect to competition policies. The competition policy model of the European Union (EU), in which a single market is consolidated within a regional trade agreement, is analysed from the perspective of regional integration theory. Among the conclusions of this chapter, it is noteworthy that the PA is not only a trade integration effort, but also addresses social and political objectives. However, the Alliance is in the initial stages of developing its institutional structure and greater progress is expected that will allow it to cope with diverse regional integration issues, including in regard to competition policy. The member countries will need to adjust their socio-political and legal rules and provisions, taking account of the developmental stages of their economies.

The present chapter focuses on the question of whether the Dispute Settlement Mechanism (DSM) included in the Pacific Alliance (PA), which comprises Chile, Colombia, Mexico and Peru, offers better and more effective guarantees, in the case of treaty breaches, than DSMs in other agreements between PA members. In other words, this chapter compares the PA’s DSM with the DSMs included in the bilateral free trade agreements (FTAs) previously signed between its members, as well as with the World Trade Organization (WTO) Dispute Settlement Understanding (DSU). This question arises because, despite the availability of multiple bilateral forums to solve commercial disputes, they appear useless. Experience has shown that States have preferred to appear before the WTO system, which has demonstrated a certain level of effectiveness that the bilateral DSUs had not. In this regard, this chapter will firstly focus on the relevant features of the PA’s DSM and compare them with the DSU. Secondly it will look at how the PA’s DSM interacts with the multilateral Dispute Settlement Body (DSB), in light of the importance of trade liberalization. Finally, conclusions are drawn regarding its relevance, taking into account the many overlapping international court systems in place, and how this situation could affect the implementation of the PA commercial Agreement by creating uncertainty among its members.

The Pacific Alliance (PA) is a regional integration initiative that was officially established in 2011 by Chile, Colombia, Mexico and Peru. One of the PA’s principal objectives is to build – in a participatory and consensual way – an area of deep integration to move progressively towards the free movement of goods, services, resources and people. Bringing together a group of like-minded countries that have long embraced a trade- and foreign direct investment-driven growth and development and pursued a number of pro-competitive market reforms at the domestic level, the PA is notable for the high level of hard and soft law interaction ambitions it espouses despite the low level of intra-regional trade and investment characterizing the regional grouping. This chapter offers a summary and informed reading of the contributions made by a diverse group of academics, policy experts, lawyers, and officials from national governments and international organizations at the conference from which this edited volume is drawn.