What is the Pacific Alliance?

The alliance is a bloc of four countries—Chile, Colombia, Mexico and Peru—created in 2011. The International Relations Committee report described it as a group of nations that have a shared commitment to open trade and democracy. It observed that the bloc is not a customs union, as each country has its own trade policy. However, it took evidence that there was “very clear convergence” between members in this area.

The UK is one of 59 countries with observer status in the alliance. The committee stated that the alliance is seeking to engage with observers in areas such as consumer protection, infrastructure and investment, culture, education and trade facilitation. Four observers—Australia, Canada, New Zealand and Singapore—are also seeking associate membership. The committee said this requires a commitment to negotiating for a comprehensive free trade agreement (FTA) with the existing alliance members. In December 2020, Singapore announced that it had “substantially concluded” an FTA with the bloc.

The committee set out how the nations in the Pacific Alliance are also members of several other regional organisations in Latin America. In addition, they are all associate members or observers in Mercosur, the southern common market. Mercosur currently counts Argentina, Brazil, Paraguay and Uruguay as full members. The committee’s witnesses said that the Pacific Alliance has been more cautious about integration than other organisations, but that it has successfully increased trade. One academic witness described it as “possibly the most effective regional integration scheme in Latin America”. Mercosur has pledged closer cooperation with the Pacific Alliance.

Why are the alliance countries important to the UK?

Setting out the background to its report, the committee argued the four countries:

  • Were economically significant. It said they would, if considered together, constitute the world’s seventh largest economy.
  • Currently had “extremely modest” levels of trade with the UK, meaning that there was “great potential” for increases. The report suggested that Pacific Alliance countries accounted for 0.7% of UK exports in 2017, and 0.6% of UK imports.
  • Had a similar outlook to the UK in areas such as democracy, the rule of law, a rules-based international order and climate change.

Chile, Mexico and Peru are also members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a free trade agreement between 11 Pacific Rim countries including Australia and New Zealand. Colombia has also formally applied to join. The UK Government has said that joining CPTPP is a “key part of our trade negotiations programme” following Brexit. The committee argued that if the UK aimed to join CPTPP, strong relations with the alliance countries would be “invaluable”. In September 2020, the UK opened negotiations on the UK’s potential accession to CPTPP.

What UK and EU trade agreements exist with the alliance countries?

The EU has trade agreements of different forms with each of the countries in the bloc, which also applied to the UK while it was a member. To facilitate UK trade following Brexit, the UK has signed continuity trade agreements with all four countries, although that with Mexico is not yet fully in force.

In September 2019 the EU and the alliance reached an agreement to “strengthen cooperation and dialogue” on a range of issues, including economic integration, climate change and facilitating the movement of people.

How has the UK engaged with the alliance to date?

In evidence to the committee, officials from the then Foreign and Commonwealth Office (FCO) stated that the UK had engaged with the four countries both bilaterally and, since its formation in 2011, as an alliance. They said that strong political cooperation between countries in a region was helpful to the UK, as it allows the UK to develop programmes with a greater “regional reach” and also provide better value for money.

The committee listed some specific areas of engagement between the UK and the Pacific Alliance, including:

  • Offering around 400 Chevening scholarships to students from alliance countries.
  • Supporting green finance in the region.
  • Supporting girls’ education, especially in science, engineering, technology and mathematics.
  • Helping to strengthen the countries’ competition authorities.
  • The British Council has carried out a range of training, arts and engagement exercises.

However, the FCO also observed that alliances in the region went through “cycles of change”. It noted recent elections in Mexico and Colombia and stated that in light of these it was keeping its strategy towards the alliance under review.

What did the committee recommend?

The committee made a series of recommendations for the UK’s approach to the alliance and to Latin America as a whole. It said the Government should:

  • Increase ministerial visits to the four countries, after a period of declining frequency of visits.
  • Ensure that the UK is represented by ministers, rather than senior civil servants, at Pacific Alliance summits.
  • Be an “active” observer state in the alliance, while also developing bilateral ties with each country.
  • “Seriously consider” allowing visa-free access to short-term visitors from Colombia and Peru, to promote business, academic and tourism visits (in line with arrangements for certain visitors from Mexico and Chile);
  • Develop a “coherent, well thought-through approach to Latin America as a whole, and to its regional and sub-regional organisations”, including maintaining engagement with all of the regional groupings and alliances.
  • More clearly define the roles of various UK representatives in the region, including the Foreign, Commonwealth and Development Office (FCDO), the Department for International Trade (DIT), ambassadors, the trade commissioner to the region and trade envoys.
  • Review DIT’s business support service in areas such as language skills.
  • Promote relationships between the alliance and the Commonwealth.

Mark Menzies (Conservative MP for Fylde) is the Prime Minister’s trade envoy for Chile, Colombia and Peru, as well as for Argentina. Baroness Bonham-Carter of Yarnbury (Liberal Democrat) was trade envoy for Mexico at the time of the committee’s report. She stood down in October 2020 and has not yet been replaced.

How did the Government respond?

The Government’s response to the committee’s report agreed with many of the points made about the significance of, and potential for growth of trade with, the alliance countries. However, it disputed the absence of a coherent strategy towards Latin America and any lack of clarity in the roles of the various representatives. It said the UK’s approach was coordinated across Whitehall by an Americas Regional Board. It also argued that the various channels to the region, including the trade ambassador and trade envoys, allowed it to promote the UK’s interests in various ways. These included in respect of trade, as well as law, justice, good governance and climate change initiatives.

Referring to the suggestion of allowing short-term visa-free access for visitors from Colombia and Peru, the Government said that it was “balancing a range of interests such as growth and prosperity as well as security considerations”. In addition, it said that all non-EEA nationals were subject to the same immigration assessments, regardless of whether a visa is required.

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Image from Pacific Alliance website.