Several days ago, Colombia’s President Ivan Duque, by way of his minister of foreign affairs Carlos Holmes, formally announced that his country would be leaving the Union of South American Nations (UNASUR) by the end of the year. Having criticized UNASUR throughout the campaign for its failure to condemn the authoritarianism of the Maduro regime in Venezuela or its institutional inability to address that same country’s ongoing crisis, President Duque has shown leadership in denouncing the South American Union as an organization without a clear, practical or democratic agenda.

Politics and Economics in Latin America

Meanwhile, President Duque has reassured his commitment to the regional integration initiative and trade bloc that is the Pacific Alliance. Founded in 2012 by Chile, Colombia, Mexico, and Peru, the Pacific Alliance is currently in the process of incorporating Panama, Costa Rica, Ecuador, and Guatemala. The four current and core members of the Pacific Alliance bring together a territory of almost 5.2 million square kilometers, which is larger than India. Likewise, the four core members have a total population of approximately 218 million citizens, which means that if the Alliance were a country it would be the fifth most populated in the world. Thus, the large economic and policy potential of the Pacific Alliance. Currently, the President pro tempore of the Pacific Alliance is the Peruvian Head of State Martin Vizcarra. Similarly, the aggregate nominal (not PPP) gross domestic product (GDP) of all four core countries is about US$2.2 trillion, while their aggregate GDP in terms of PPP is approximately US$3.7 billion. This means that the Pacific Alliance accounts for almost half of Latin America’s trade (both exports and imports) as well as more than a third of the regional GDP.

Even though the Pacific Alliance is relatively new and the economies of the four founding countries are not yet intricately integrated, the Alliance does give the governments more leverage when bargaining as a trade bloc. Given that the Pacific Alliance’s main mission is to promote the economic projection of its member states towards the markets of Asia Pacific, the respective governments have sought greater interaction with regional fora, such as the Asia Pacific Economic Cooperation (even though Colombia does not formally belong to APEC) and the rehashed Trans-Pacific Partnership (TPP).

Amongst the four founding members of the Pacific Alliance, Mexico is the most populated and features the largest urban center, Mexico City with its 22.6 million inhabitants. Moreover, Mexico has the highest national GDP, at US$2.5 trillion. However, Chile, not Mexico, has the highest GDP per capita within the Pacific Alliance. In terms of trade, during 2016, Mexico imported US$369 billion worth of goods and exported US$394 billion, resulting in a trade surplus of US$24.6 billion. Furthermore, that same year, the country’s main export, representing 8.6% or US$34 billion of the country’s total, were cars. On the other hand, the country’s main import, representing 6.2% or US$22.8 billion of all international purchases, were vehicle parts.

(Read more about Striking Regulatory Balance, the Key to Investment Growth)

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