Recent Global Events Facilitate Mercosur-Pacific Alliance
Recent changes within Mercosur and the Trump's victory in the U.S. have created a situation that would have been unimaginable just a few months ago
*Guest blog post from Latinoamerica21.
"Rarely in history do scenarios align as they are aligned today," Mexico's Economy Minister, Ildefonso Guajardo, said when speaking about the first meeting of Mercosur and the Pacific Alliance countries’ foreign ministers.
The recent World Economic Forum on Latin America, held in Buenos Aires, was the first rapprochement between the two blocks and was made possible because of changes within Mercosur and the victory of Donald Trump in the U.S presidential election. These factors have created a situation that would have been unimaginable just a few months ago.
The victory of Mauricio Macri in Argentina and the replacement of Dilma Rousseff in Brazil with President Michel Temer, translated into a more open vision within the two main Atlantic bloc powers. During the time these two countries were run by leftist governments, they had maintained a protectionist vision regarding foreign trade strategies. Due in part to these recent changes, Venezuela, which is opposed to such an approach, has been completely marginalized within the group.
The United States’ more protectionist agenda following the election of Donald Trump is affecting commercial strategies at a global level. This new reality poses a major threat to Mexico, which exports around 80% of its products to its northern neighbor and which, after decades of looking almost exclusively towards the north, now seeks to open new markets in an effort to alleviate their commercial dependence on the United States.
"This is an important milestone in Latin American integration because we are committed to moving forward at a time when international uncertainty reigns," said Heraldo Muñoz, Chile's Foreign Minister and the pro tempore president of the Pacific Alliance of which Colombia, Mexico and Peru are also members. On behalf of Mercosur, a bloc composed of Argentina, Brazil, Paraguay and Uruguay, Argentine Foreign Minister Susana Malcorra said that, "the clear objective is to reinforce the commitment to free trade and multilateralism."
This possible agreement between the blocs is a far cry from the mistrust that existed between them in the past when the Pacific Alliance considered Mercosur to be too politicized and economically inefficient, and the Atlantic block saw the Alliance as too overtly trade focused and strategically aligned with the United States. Following the aforementioned changes affecting the region, today the 8 countries’ objectives are aligned toward seeking to reduce tariff barriers and facilitate intraregional trade.
In order to move in this direction, the countries’ foreign ministers have defined a "road map" that will be tackled in the coming months. The 6 points it addresses are: the creation of regional value chains, trade facilitation through a single foreign trade window, customs cooperation between countries, promotion of commercial production and of SMEs, removal of non-tariff barriers to trade, and the facilitation of services trade.
The ministers announced their commitment to achieve, "concrete results that will advance the negotiations and strengthen the role of the WTO to meet the challenges of the 21st Century." In fact, this does have the potential to advance—intra-regional trade is significantly higher within the European Union and within Asia than it is in Latin America today.
Despite the rapprochement within Latin America, the elimination of tariffs is not sufficient to indicate total integration. According to the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, it is also necessary to continue to move forward in other areas such as regulatory convergence and trade facilitation, as well as the quality of transport infrastructures, logistics, energy and digitalization of the various systems.
"Working together in all these areas would contribute to boosting intraregional trade and investment flows, thus favoring greater productive integration," among the blocs, which together account for 90% of Latin America's GDP.
Jeronimo Giorgi is an Uruguayan journalist dedicated to international issues. He has collaborated with various media in Latin America and Europe, and has received distinctions such as the 2016 King of Spain International Journalism Award. Giorgi is currently pursuing a master's degree in Latin American Studies.
Latinoamerica21 is a blog about current economic, political and social topics in Latin America that is currently published within the newspaper El Observador de Uruguay and will soon be published in other media outlets within the region. The original version of this blog post is available in Spanish: El nuevo contexto regional facilita el acercamiento Mercosur - Alianza del Pacifico
*Guest blog posts do not reflect the views of FocusEconomics.
5-year economic forecasts on 30+ economic indicators for 127 countries & 33 commodities.
Date: April 25, 2017
TagsEconomic Growth (GDP) Germany Eastern Europe European Union Industrial Metals Commodities UK IMF Agricultural Commodities G7 Company News Fed USA Tunisia Panelists Australia Base Metals Commodities Oil Unemployment rate Brexit oil prices Emerging Markets Consensus Forecast Sub-Saharan Africa India precious metals France Russia World Bank Commodities Latin America Argentina Financial Sector Japan South Africa Inflation China Venezuela Banking Sector MENA Forex Infographic Trade Major Economies Iran Exchange Rate United States Colombia Investment Portugal Ukraine Vietnam Asia OPEC Energy Commodities Mexico Canada Spain Turkey Italy Africa Housing Market Euro Area Precious Metals Commodities Brazil Gold Nordic Economies Greece
24 minutes ago
54 minutes ago
Eurozone: Composite PMI eases in June, but points to best quarter in over six years in Q2. Read more:… https://t.co/ZIMqfbFsCC
54 minutes ago
Greece: Economy grew after all in Q1, revised data shows. Read more: https://t.co/nBqGtlgt2K
1 hour ago
1 hour ago
- How will the Fed reduce its balance sheet & and how will the ECB end QE? - 18 economic experts weigh in
- Thoughts on "unwinding" QE from Frances Coppola
- Gold: The Most Precious of Metals (Part 3)
- The Fed and ECB at a crossroads: Unwinding QE
- Spain: The economy that continues to silence the critics
- Latin America: The Most Unequal Region in the World
- The History of OPEC: Has it been a Success?
- FocusEconomics Announces 2017 Analyst Forecast Awards Winners
- Latin America’s rising unemployment bucks nearly decade long trend
- Escape from the Central Bank Trap by Daniel Lacalle
- China's economic rebalancing act: What to look out for in 2017
- Driving Growth in Latin America: Challenges & Priorities
- Is the Global Economy Rebalancing?
- Commodity exporters face challenging times
- Recent Global Events Facilitate Mercosur-Pacific Alliance
- 23 economic experts weigh in: Why is productivity growth so low?
- Mexico's outlook as Trump nears 100-day mark
- Interview with Oxford Economics Senior Economist on implications of the possible outcomes of the French Presidential Election
- The anxiety of the small saver in a world of negative interest rates
- Brexit negotiations. Between Uncertainty and Urgency
- An Economic History of the EU from El Blog Salmón
- Baby Boomin': Implications of high population growth in Latin America
- Survey of International Economists Predicts a Le Pen Defeat in French Elections, Says Macron has Best Economic Plan
- Spain in a global context: developed economy with some challenges
- How much is crime costing Latin America?
- Predictions & Estimates from Economist Daniel Lacalle
- What economy will the new Dutch government inherit?
- “The data is not a true reflection of reality in India” Interview with Société Générale India Economist
- 2017 & 2018 Economic Outlook for the Top Oil Producing Countries
- Which countries will have the highest and lowest inflation in 2017?
- What are the prospects for Emerging Economies in 2017?
- What to expect in Asia for 2017
- Top Economics & Finance Blogs of 2017
- Latam to Resume Moderate Growth in 2017 but Important Risks Plague Outlook
- 4 Key European Elections That Will Impact the Economy in 2017
- How are security concerns and political chaos affecting Turkey’s economy?
- Global growth to edge up in 2017
- Set to breach targets again? Debt and deficit outlooks for Southern European Eurozone countries in 2016 & 2017
- What does Donald Trump mean for the U.S. economy?
- How will emerging markets perform in 2017?
- The economic impact of a break in U.S.-Philippines ties
- Trump election: Base metals surge due to infrastructure plan
- 5 updates on the Venezuelan economic crisis
- Canada: When your neighbor’s house is on fire…
- Short-term pain before long-term gain? A look at French labor reform and economic growth
- Asia: Unremarkable growth & unfulfilled promises?
- How India's latest monsoon is affecting the economy
- Innovation in Latin America: Potential Goes Untapped Due to Weak Economic Conditions
- Russian economy update in wake of OPEC deal announcement
- The Wisdom of the Crowds and the Consensus Forecast
- Can the peso predict the U.S. election results?
- There's no end in sight to the Venezuela crisis
- A Look at the European Union Political Calendar
- Survey of international economists shows uncertainty surrounding elections damaging U.S. growth prospects
- FocusEconomics partners with leading online statistics provider Statista
- China: Recent postive economic data may be papering over the cracks
- Sub-Saharan Africa's 2016 & 2017 growth rates
- The Italian Dilemma: Weak banks pose risk to already faltering domestic demand
- How much money do migrants from Latin America send home?
- The U.S.' (Not So) Mysterious Case of the Missing Men
- What to expect from the G20 economies by 2020
- The Pain in Spain: Robust GDP growth cannot mask the persistent structural deficit