Spotlight: LatAm trade blocs Mercosur, Pacific Alliance on path to convergence

Chile, under the leadership of President Michelle Bachelet, has promoted "the convergence" of Latin American trade blocs Mercosur and the Pacific Alliance.

"Seeking the convergence of two different mechanisms of integration that share similar goals must be a reality," Bachelet has said recently.

"We must once and for all put aside all these preconceptions that there are two opposing blocs that do not dialogue between them," she added.

The older of the two, the Southern Common Market (Mercosur), gathers south cone countries Argentina, Brazil, Paraguay, Uruguay and Venezuela, while the Pacific Alliance brings together Chile, Peru, Colombia and Mexico, all countries with extensive Pacific coasts.

To promote this convergence, Chile's Foreign Affairs Ministry has developed a series of initiatives, including inviting Argentinian President Mauricio Macri to an alliance summit, scheduled for June 28 to July 1 in Chile's southern port city of Puerto Varas.

The alliance is home to 35 percent of the Latin American and Caribbean population, and represents up to 50 percent of the region's total trade.

Mercosur already lists Chile, Colombia and Peru, among other nations, as associate members, with Mexico as an observer country.

Together the two blocs account for more than 80 percent of the region's foreign trade, and more than 90 percent of Latin America's gross domestic product (GDP) and flow of foreign direct investment, according to data from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

The key to convergence lies in identifying aspects the blocs have in common, especially specific terms of agreements, in a region that has achieved relative stability despite the global financial crisis and more recent sluggish regional economic growth.

Joining the Pacific Alliance is one of the goals of Argentina's president, who already has the strong support of his Colombian counterpart Juan Manuel Santos, as evident during Macri's recent trip to Bogota.

Paraguay's President Horacio Cartes has also expressed his intention to participate in the alliance as an observer country and forge ties with the bloc, without negatively impacting Mercosur.

In Uruguay, a founding member of Mercosur, former President Luis Alberto Lacalle has said the bloc needs to reconsider its future, while other prominent personalities have called on the government to study the possibility of joining the alliance.

While the Pacific Alliance has succeeded in consolidating itself in a relatively short time since it was created in 2012, Mercosur has been weakened by political difference between members, especially following the recent rise of conservative governments in Argentina and Brazil.

In Brazil, industry trade unions complain that membership in Mercosur limits a country's ability to independently establish alliances with markets outside the bloc.

The goal of economic integration now seems unlikely in Mercosur, but more viable within the alliance, which has made headway in such areas as the verification and balanced application of norms regulating trade transactions, spurring exchange between member countries.

At the upcoming summit in Puerto Varas, participants will be talking about deepening integration amid stagnated trade exchange in the region for the third year in a row.

Today, driven by a certain political affinity, the left-leaning governments of Bolivia and Ecuador are looking to join Mercosur, as Central American countries, such as Costa Rica and Panama, are trying to become alliance members.

In its 20-year existence, Mercosur has seen achievements on various fronts, including in promoting judicial cooperation and educational integration, facilitating the flow of people between member countries, promoting environmental management, and establishing the Mercosur Virtual School, which provides training in e-commerce.

Several studies propose the bloc focus on its strengths, redirecting its efforts towards resolving social issues and promoting accords in the areas of science, technology, health and education.

In the meantime, the Pacific Alliance is poised to pursue the free movement of goods and services, capital and people, with an eye to improving competitivity, boosting trade with the Asia-Pacific region, and raising the standard of living among member states. Endit