After 10 years, Mexico has wasted opportunities of the Pacific Alliance trade agreement

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The Pacific Alliance boasts of being the eighth economic power and the eighth exporting power in the world.

Mexico celebrates 10 years of constituting the Pacific Alliance with Chile, Colombia, and Peru, a commercial block that businessmen see as beneficial, but that analysts perceive as wasted because the Mexican economy is still anchored to the United States.

The mechanism has encouraged Mexican investment in these countries to consolidate, Fernando Ruiz, general director of the Mexican Business Council for Foreign Trade (Comce), who now chairs the Business Council of the Pacific Alliance, explains in an interview with Efe.

“There are many Mexican companies that have reinvested, and new investments from Mexico are arriving in these countries and much of this is due to the security that having a broad trade and investment agreement provides,” explains the business leader.


The Pacific Alliance boasts of being “the eighth economic power and the eighth export power worldwide”, representing 41% of the gross domestic product (GDP) of Latin America and attracting 38% of direct foreign investment.

A STORY OF RESILIENCE

The trade bloc was formally and legally constituted on June 6, 2012, with the signing of the Framework Agreement.

Unlike other regional mechanisms, such as Mercosur (Argentina, Brazil, Paraguay and Uruguay), the Pacific Alliance has focused on pragmatic trade policies.

Even so, the director of the Comce recognizes that “the fact of the changes of presidents has harmed”.

“In Mexico, this process began (Felipe) Calderón (2006-2012), followed by (Enrique) Peña (Nieto, 2012-2018) and now (Andrés Manuel) López Obrador, and they have different ways of seeing things. Same in Colombia, Peru and Chile. So there is also a learning period for the governments in this integration process”, says Ruiz.

Although Mexico received the pro tempore Presidency of the Pacific Alliance last January, the Government’s Ministry of Economy (SE) rejected a request for information and an interview from Efe for this article.

In this context, the business leader considers that the success of the trade bloc, compared to other mechanisms, is the “participation of the private sector” and the work done to standardize regulations, such as health and food.

“In the world’s current foreign trade, tariffs or the reduction of tariffs are not attractive enough to promote trade, but rather it is to eliminate non-tariff barriers, such as health regulations,” Ruiz mentions.

Despite the advantages, Mexico has only allocated about 2% of its exports to the Pacific Alliance, a proportion that fell to 1% shortly before the pandemic, warns Edmar Ariel Lezama, coordinator of the Single Program of Specializations in Economics of the Pacific Alliance. National Autonomous University of Mexico (UNAM).

The professor believes that “Colombia has taken advantage of it, as have Chile and Peru, but Mexico has not”, since the Mexican economy still exports more than 80% of its products to North America.

“It is not a bad instrument, but Mexico has done the same as with all the trade agreements it has, it simply leaves them there forgotten and continues to be anchored to what has to do with the trade of the United States and Canada,” says Lezama.

The academic adds that Mexico “has set aside” other promises of the Pacific Alliance, such as the free mobility of people because it applies “obstacles and locks because it is tied to the rules of the United States.”

“It is a small mechanism compared to Mercosur. Despite the fact that the Pacific Alliance has other clauses or rules different from those of trade, they have not been fully exploited either and it seems to me that it has to do with the migratory issue”, he points out.

DIVERSIFICATION PROMISE

Mexico’s trade with its Alliance partners totaled 107.466 million dollars from 2011 to 2021, according to data provided by the SE last year.

During this period, Mexico registered a surplus of 41,391 million dollars thanks to 74,427 million dollars of exports and 33,038 million dollars of imports.

Therefore, director Comce asserts that “the volumes have grown”, but “what happens is that, since the North American percentage continues to be the highest, it is thought that Mexico has not diversified” markets.

“Yes, we have diversified, what happens is that trade continues to grow in the United States, but it is also growing in third countries, because they are much larger volumes than we had 10 years ago,” says Ruiz.

And as proof of the attractiveness of the Alliance, the business leader cites Ecuador’s interest in joining the mechanism, in addition to other Latin American countries that he cannot yet reveal.

“We are looking at how to incorporate them. So we want to strengthen and make a wider region with those rules of the game”, she concludes.

Source: forbes.com.mx

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