Economic integration has seen the Pacific Alliance emerge as the most outward-looking in the region
The Pacific Alliance, a pro trade-liberalisation, Asia-Pacific focussed initiative founded by Chile, Colombia, Peru and Mexico in April 2011, was implemented by a "Framework Agreement" signed in Chile in June 2012.
In February 2014, the four member countries signed the first Additional Protocol covering goods, services and investment, which eliminate 92 per cent of tariff lines upon entry into force.
Unlike other economic blocs in the region, the Pacific Alliance is the most outward-looking. Through economic integration, The Alliance is looking to function as a single economic entity rather than a club of competing countries. Integration of financial markets and harmonisation of regulatory regimes has been key to its success, and has been supported across the political spectrum.
The Alliance builds on existing free-trade agreements between members to deliver a free flow of goods, services, people and investment. The Alliance aims to promote competitiveness, increase trade with the Asia‑Pacific and contribute to members' economic and employment growth. Mexico, Chile and Peru are members of the Trans-Pacific Partnership, with Colombia also expressing an intention to join the TPP at some point in the future.
This bloc comprises 37 per cent of Latin American GDP and is the seventh largest goods exporting entity worldwide. The regulatory and tax regimes of Pacific Alliance countries are stable, predictable, transparent, and investor-friendly. The World Bank has consistently identified the member countries as leading the region in the Ease of Doing Business Survey. Members have also shown a remarkable ability to be adaptive during the drop in commodity prices and a global economic slowdown.
Australia was one of the first observers of the Alliance (since November 2012), and is considered as one of the most active. The Alliance has prioritised four thematic areas for cooperation with Observer States: science; technology and innovation; trade facilitation; small to medium enterprises; and education. Australian Government engagement with the Alliance countries has focussed on the vocational education and training sector, with emphasis on the logistics industry.
The opportunities in Alliance countries has been around direct investment and services, building on the Australian expertise in established industries, particularly in the education sector. The economic growth of Alliance countries will see further opportunities for Australian business in agriculture technologies, port and rail infrastructure, oil and gas, minerals, health, transport and logistics, information technology and communications, and infrastructure more broadly.