Will Mercosur and the Pacific Alliance Strengthen Ties?

Samuel George responds for the Inter-American Dialogue’s Daily Advisor

PACOSUR?

PACOSUR?

Last week I had the opportunity  to join  former Mexican  Ambassador to the United States Arturo Sarukhan, Endesa-Chile Chairman Jorge Rosenblut, and President Emeritus of the Inter-American Dialogue Peter Hakim to respond to the question Will Mercosur and the Pacific Alliance Strengthen Ties? 

Each of us submitted answers individually, and these answers were published in the Inter-American Dialogue’s daily Latin America Advisor.

You can find the full edition HERE.

Here, I reproduced my personal contribution to the conversation:

Q: Foreign ministers of Mercosur and Pacific Alliance countries will meet in Santiago, Chile in November in an attempt strengthen trade ties between the two blocs, Paraguay’s foreign minister announced in mid-September. What are the opportunities and challenges presented by the plans to strengthen ties between the two groups? 

A:  There is considerable opportunity for collaboration. Mercosur represents a large market that is highly protected from international trade. If Pacific Alliance countries could negotiate privileged access to these markets, exports from the “Pacific Pumas” could be very competitive in Atlantic Latin America.

Given the decelerating growth in Asia and the muddled recovery in the United States, the Alliance countries are certainly open to expanding trade with other partners.

From Mercosur’s perspective, countries such as Uruguay, Paraguay, and increasingly Brazil are uncomfortable with the direction of Mercosur. The smaller River Plate countries view the Alliance model of global integration as more conducive to their economies. Brazil, facing stubbornly low growth, is under increasing pressure from the private sector and pundits to adopt a more market friendly stance.

The November dialogues are preliminary and are unlikely to produce any groundbreaking results. But if stakeholders establish momentum, the conversation could eventually redefine (or at least redirect) Mercosur.

Uruguay, Paraguay and Brazil are unlikely to leave Mercosur precisely because it guarantees access to large, otherwise protected markets. But these countries may push for changes in Mercosur statutes that could, for example, offer countries more leeway in negotiating agreements bilaterally.

Ongoing EU-Mercosur negotiations could be informative for Pacific Alliance-Mercosur dialogues. The more trade-friendly Mercosur countries want a deal with the EU, and within Mercosur they have discussed a two-track negotiation process that would allow some countries to enter a trade agreement with the EU while others would not. This could set a precedent moving forward.

For more, check out the full piece HERE

Samuel George is a Latin America specialist working in Washington DC.

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