Diplomatist Magazine Diplomatist September 2019 | Page 7

SPECIAL REPORT
Travel and work within the Alliance are also almost free of
regulation for their citizens. The stock exchanges of Colombia, Peru,
Chile, and Mexico are already integrated.
Objectives of the Alliance
This was created in 2011 and the focus of this alliance
is on free trade, economic integration and free movement of
people within the bloc. And to further strengthen free trade
with a clear orientation towards Asia. As a bloc, the PA is
the 8th largest economy in the world, 7th largest exporting
entity worldwide. Since Mexico which is the second biggest
economy in the world, members currently account for 37
percent of the gross domestic product in Latin American
and the Caribbean. All these four countries are suppliers of
important raw materials to India, mainly fuel and minerals.
Besides agriculture, fisheries, the PA which is turning
out to be an integrated market offers Indian companies
opportunities for collaboration in areas including agriculture
and fisheries, SMEs sector, trade facilitation, pharmaceutical
products and science and technology.
These member countries are politically as well as
economically stable and have investor-friendly policies
and tax incentives. And, in the Latin America region, these
countries lead in the World Bank’s ‘Ease of Doing Business’
survey. Diplomats from these countries are keen on putting
in certain procedures, such as facilitating ease of travel for
business people into the alliance countries, reductions in
tariffs, simplifying regulations, etc. to attract more investment
into these countries.
They have also agreed to common Pacific Visas on the
lines of the Schengen Visa, which can be issued by all the
four-member countries to foreigners, which will be a valid
document for traveling to all the four countries. India and
the Pacific Alliance has the potential to touch $30 billion in
trade soon.
Travel and work within the Alliance are also almost
free of regulation for their citizens. The stock exchanges of
Colombia, Peru, Chile, and Mexico are already integrated.
A joint fund has been set up for tourism promotion; science
and technology; scholarships; convergence in finance,
telecommunications, maritime and air services within the
Alliance members.
Today, the alliance accounts for 40 percent of its trade
with Latin America and has been growing rapidly. Mexico,
Colombia, Peru, and Chile are the second, third, fourth and
fifth largest destination of India’s exports in Latin America,
after Brazil.
India regularly sources crude oil from Mexico and
Colombia and Chile and Peru are important sources of copper
and gold imports. The PA has already attracted 30 Indian
companies in the PA in areas such as IT, pharmaceuticals,
energy, mining, and manufacturing.
Pro Tempore Presidency of the Alliance
Chile hopes to emerge as a key partner for India in
the Indo-Pacific region amid efforts by the Alliance to
explore cooperation beyond Latin America to thwart trade
protectionism.
Earlier this year, India’s President Ram Nath Kovind had
visited Chile where several agreements were inked in the
fields of mining, culture, and disability. Both countries are
negotiating the further expansion of India-Chile Preferential
Trade Agreement (PTA).
With Chile as the founding member of the Pacific
Alliance, and India holding observer status, ongoing talks for
further expansion of the PTA will hopefully deepen relations
between the two countries and also help in enhancing India’s
engagement with the emerging trade bloc. Chile has identified
climate change, digital economy, e-commerce and fight against
corruption as its priorities finding common ground with India.
The Chilean President Sebastian Pinera has met
PrimeMinister Narendra Modi on the sidelines of the G-20
Summits in Argentina last November and Japan in 2019 and
at the recently concluded G-7 Summit in France in August.
Chile is the sixth-largest trading partner of India in the Latin
American region. The bilateral trade between the two nations
registered an impressive increase of 50 percent in 2017-18,
to reach $ 2.8 billion.
At the recent Pacific Alliance summit in Lima, Peruvian
President Martin Vizcarra announced that Ecuador is expected
to become a member of the market-friendly regional trade
bloc next year. A key goal for Pacific Alliance leaders is to
encourage closer links with MERCOSUR - another regional
trade bloc that includes Argentina, Brazil, Paraguay, and
Uruguay. Closer links between the two could create a regional
economic powerhouse to rival the largest trade blocs in the
world.
Trade Agreements
Chile already has a PTA with India. Colombia and Mexico
have been approached by the Ministry of Commerce but it
will take time. Both have countries have bilateral agreements
with India on investment and taxation. India has started
negotiations with Peru. n
* Author is senior journalist, The Financial Express
Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 9 • September 2019, Noida • 7