Abstract
The Pacific Alliance (PA) is an integration process that projects the commercial exchange of value-added products for its members. However, the external and internal crises have made the PA a volatile region in social and economic terms. This chapter analyzes the economic and trade policy trends in PA countries since 1990 and how they faced the different world and regional economic crises. From the particular analysis of the countries, there are similarities and differences in trade trends and the way to control crises. This chapter provides a general framework to review more specific approaches by sectors, industries, and companies.
TopIntroduction
In the 1980s and the 1990s, western bureaucratized governments changed their centralized or nationalized hierarchical order to governments ruled by laws of market, quasi-market, or networks (Bevir, 2009). A more open order meant a confirmation of neoliberal policies, and while networks were configured, they could be framed in neo-institutional policies. Since then and continuing through the beginning of the 21st century, Latin American countries, in particular, have not had a common pattern of behavior confronting trade and crises. Despite its recent establishment in 2011, the PA (made up of Mexico, Peru, Colombia, and Chile) has been one of the most dynamic economic integration groups in the subregion in terms of economic openness and potential for growth of its members (Rodríguez et al., 2019). Another group with leftist governments (Argentina, Brazil, Paraguay and Uruguay) reconsidered the integration processes in a revisionist approach and finally the anti-integration group (Bolivia, Cuba, Ecuador, Nicaragua and Venezuela) which rejected any attempt of open regionalism (Ortiz, 2017; Beltran and Ferrer, 2016). In general, every single country has its own macroeconomic policies, and enterprises adapt accordingly with commercial strategies. Regarding the 4 PA countries compared with Latin America, they represent 23% of area, 34% of population and 43,5% of the GDP (World Bank and IMF, n.d.) Thus, considering such background economic characteristics, and conditions make this region attractive to do research in the field of crises and trade (Aguinis et al., 2020).
This chapter analyses the economic and trade policy trends of the PA countries since 1990 and how they faced different economic crises worldwide (e.g., the global recession in 1991, the financial crisis of 2007–08, and the COVID-19 pandemic; Kose et al., 2020; Reinhart & Rogoff, 2009) and regionally (e.g., Mexican crisis in 1994, the Asian crisis of 1997, Argentina, Brazil, and Ecuador crises 1998–2000, the crisis in Venezuela since 2002) during the last 30 years. Special emphasis is placed on trade and integration policies among its members and bilateral trade exchanges among the signatory countries of the alliance.
In the study period and to achieve this objective, after this short introduction, the first section presents the integration process of Latin America, beginning with a general approach and later to the PA countries specifically. The second section corresponds to the PA orientation to confront crises following a single country perspective of its own macroeconomic policies and the intra-trade policies and trends mainly with their PA partners. The chapter ends with some final remarks using a comparative viewpoint to establish particular and joint trading policies that may contribute to a different performance of intra- and extra-trade.
The sources of information for macroeconomic aspects are drawn from the respective governments, central banks, and international organizations such as the World Bank, the World Trade Organization (WTO), and United Nations Conference on Trade and Development (UNCTAD). Furthermore, secondary sources such as newspapers and magazines were used to complete some data that is not yet available on formal websites.
The information drawn in this chapter could be considered the starting point for future policy decisions that are driven by crises. In this sense, governments would move from a reactive position to an adaptive one based on historical experience.
Key Terms in this Chapter
Free Trade Agreement: Level of integration where countries agree to eliminate tariffs and other restrictive regulations to products originated from their territories.
Open Regionalism: It seeks to increase integration among neighboring countries, eliminating and reducing at the same time barriers to integrate with the rest of the world. It is considered as a strategy to facilitate international exchange of goods or services and to coordinate trade economic policies between regions.
Customs Union: Level of integration were countries, apart from eliminating tariffs to products originated from their territories, agree on the duties applied to products that come from third parties.
Complementary Economic Agreement (CEA): Name used by Latin American countries in the bilateral agreements they enter to reciprocally open their markets for all goods. They are part of the legal framework of the Latin American Integration Association (ALADI). They aim to open markets greater than Preferential Agreements/Partial Scope Agreements, but less than Free Trade Agreements.
Commodities: Are goods whose quality may differ slightly, but it is essentially uniform across producers. Commodities are most often used as inputs in the production of other goods or services. Commonly, their prices are defined in international markets.
Economic Integration: Is an arrangement among nations which usually starts with the reduction or elimination of trade barriers. It has a logical order of depth that depends on the degree of commitment of liberalization between partner countries.
Partial/Preferential Scope Agreements (PS): It is a basic trade agreement that includes tariff reductions on a specific group of goods, sometimes unilaterally. It is usually seen as the first stage in a long-term larger opening process.
Most-Favored Nation (MFN): Is one of the principles of non-discrimination of the WTO. In normal conditions, if a member offers a benefit to another country, it must extend the advantage to the rest of the members of the WTO.