Pacific Alliance to be key in Latin America-Asia ties

Subject

The Pacific Alliance.

Significance

The Pacific Alliance (PA), a regional trade bloc made up of Chile, Colombia, Mexico and Peru, has emphasised deepening ties with Asia since its founding in 2011. US President Donald Trump’s protectionist rhetoric has generated renewed regional interest in striking trade deals with Asia, and the PA is positioned to play a leading role. However, Mexico’s involvement in complex and uncertain North American Free Trade Agreement (NAFTA) renegotiations could pull the bloc’s most important economy in a different direction, creating barriers to the cross-border supply chains the PA aims to promote.

Impacts

• Mexico may be the ‘wild card’ in PA strategies given both domestic and external considerations.
• It may prove difficult to move beyond rhetoric in plans for ‘convergence’ with Mercosur, also plagued with internal uncertainties.
• Confusion over US policy may favour closer PA ties with Asia.