Advances towards an Agreement between Mercosur and the Pacific Alliance

Since over a year, steps have been taken towards a convergence between the Southern Common Market (Mercosur) and the Pacific Alliance (AP). An agreement between Mercosur and AP would mean easier trade for European SMEs that establish a base in any of the countries that are members of the two blocks, as it would facilitate easier exports from there to the rest of the Latin American region. Also, Mercosur’s convergence with AP signals its will to open the block to external exports, as those from European SMEs, as the AP is now a more open trading block. In addition, convergence will result in trading regulations that are similar in both blocks, thus facilitating their understanding by European firms willing to export to the region.

The Mercosur was created in 1991 by Argentina, Brazil, Paraguay and Uruguay. The AP was born in April of 2011, integrated by Chile, Colombia, Mexico and Peru. It handles 50% of Latin America's international trade and receives 42% of its foreign direct investment. Together the AP countries represent the eighth largest economy in the world and the seventh largest exporting power.

The changes in Mercosur, now with presidents Macri in Argentina and Temer in Brazil, have accelerated the rapprochement.

Mercosur and AP have created a roadmap, already in progress, with the following content:

  • Regional value chains / accumulation of origin.
  • Trade facilitation: single windows for foreign trade (VUCE), and implementation of the Digital Certification of Origin (COD) of the ALADI.
  • Customs cooperation: to compare the Mercosur INDIRA System (Customs Information Exchange) with the recommendations of the WCO (World Customs Organization).
  • Commercial promotion and SMEs: To exchange invitations to business events with the participation of SMEs from both blocks.
  • Non tariff barriers.
  • Facilitation of trade in services.

Contributing also to the advance towards freer trade between the AP and Mercosur, at the end of the Fourth Round of Negotiations between Argentina and Chile, on August 19th, both countries agreed to sign an extension of their economic complementation agreement (ACE 35) next September.

The extension covers several issues including the reduction of non-tariff barriers, both sanitary/phytosanitary and technical standards and the mutual purchase of goods and services from the SME sector.

 

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