The Pacific Alliances’ Free-Market Focus Breeds Success

Putting Economics Before Politics Brings Higher Investment, Lower Tariffs: NCPA

Source: NCPA

The Pacific Alliance’s focus on free trade over politics has increased foreign direct investment, stability, and tourism throughout the participating nations, according to a new report by National Center for Policy Analysis Research Associate Nicolas Lopez.

The report compares the Pacific Alliance, a 2011 trade alliance between Chile, Colombia, Mexico and Peru, to the Common Market of the South (Mercosur), a 1991 agreement between Argentina, Brazil, Paraguay and Uruguay.

According to Lopez, the key difference between Mercosur and the Pacific Alliance has been their focus: the Pacific Alliance put economic objectives first. By focusing on the free flow of goods, capital and people, the Pacific Alliance:

  • Trades ninety-two percent of goods between member nations free of tariffs.
  • Will remove all tariffs on merchandise within seven years.
  • Removed travel visa requirements between Pacific Alliance countries, which has spurred tourism and further contributed to commerce.
  • Has a low inflation rate, unlike Mercosur nations.

As a result of these policies, the Pacific Alliance countries have been the recipients of more than $71 billion in foreign direct investment, and they conduct half of the trade in Latin America. The Pacific Alliance nations also saw much greater stability following the 2008 economic crisis than did Mercosur.

Pacific Alliance Looks East:

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