Opinion

The Pacific Alliance: What is it all about?

14 June 2018

GILES2

Last week, at The London Produce Show and Conference, I was asked to moderate a panel discussion on this subject. This involved four UK-based representatives of the inward investment agencies of Peru, Chile, Mexico and Colombia – the countries who have formed what is now called the Pacific Alliance. Together, these four countries have a combined population of 210 million people and about 35 per cent of the region's Gross Domestic Product (GDP).

This is a group in Latin America that originally was formed in 2011 around a series of wide-ranging agreements in the areas of economic cooperation, trade development, environmental protocols, diplomatic arrangements (in some cases), investment and market access in an effort to boost the region’s macro-economies. By 2018, it appears as if the Alliance is now ready to build much quicker momentum in achieving its objectives.

It was pointed out on a number of occasions that this was very different to the way that the European Union operates and there was no political dimension to the creation of the Alliance. The basic thinking behind its creation, however, is a recognition that there are more things in common across the region than are different, and that some of the challenges faced by all four countries are probably better off tacked together, rather than on an individual basis. Good examples are areas such as negotiating market access, especially in Asia, and looking at joint funding for trade and market promotion work.

This is a hugely ambitious project but one that seems to be gaining traction in Latin America and other parts of the world too. It was stated that up to 50 other countries, including the UK, have expressed an interest in joining the Alliance at some stage in the future. There are now 49 observer states, of which two are candidate countries in process of full membership: the Central American countries of Costa Rica and Panama.

There is often much talk about countries “working together” on joint objectives and this seems to me to be one of the ultimate tests of whether this actually can be achieved. The evidence so far is that, to date, this concept is gaining momentum. Looking at the track record of these countries in export development and their willingness to do things differently, you wouldn’t bet against them achieving the stated long-term goals of the Alliance.

Some of the features and objectives of the Alliance in the agri-food sector in the future might include the following:

  • The UK will continue to be a key market for the members of the Alliance in the future, and they might come together to negotiate joint market access to the UK post-Brexit.
  • They want to supply a better range of products to the UK and other international markets. This likely would include more organic, exotic and Fair Trade-type products. There is also a desire to build on consumer interest in Latino-type cuisines.
  • There will be an increased number of joint ventures between the four countries, with companies from Chile investing in Peru, from Mexico into Colombia and so on in order to provide a wider range of produce and funding into R&D-type projects. The use and conservation of water, for example, is an area that is an issue for all four countries, as are the wider challenges presented by climate change.
  • The Alliance can be used to promote investment in new growing/production regions and boost the investment in the physical infrastructure of the four countries both internally and externally.

  • The Alliance will look for enhanced access to other international markets, especially in Asia, which is a region of interest to them all. This might see joint promotional activity take place in-country and higher levels of supply chain cooperation. As an example, produce from one country could be exported to Asia using shared logistical and shipping arrangements from another. In some cases, this sort of joint activity already has started.

  • Retaining the individual identity of each country in terms of market development, but at the same time, recognising that there are a number of hugely important issues such as corporate social responsibility (CSR) that impact them all.

The concept of the Pacific Alliance seems to be an exciting one and builds on the shared economic, social and cultural interests to be found across the region. There is also a desire to boost trade and investment and work together on important issues of joint interest in the environment, CSR, and market access, not only in mature markets but especially so in Asia. To me, it came across as a massive breath of fresh air. 

It was admitted that the conclusion of all the fine detail the Pacific Alliance had yet to be agreed, but there was a determination to “get on with it” in the meantime. There seems to be a very strong underlying recognition that there is more to be gained in the long run by working together on these key issues than looking to preserve self-interest and worrying about “what the next door competition” (was going to gain). This seems to me very much all about the bigger picture in what is a global market and economy for these countries and what can be gained, rather than the fear of what might be lost.  1+1 has always equalled 3, but in this case, it seems that 1+1+1+1 might add up to a whole lot more as well.

John Giles, the Divisional Director of Promar International, has worked in all four countries in the past on agricultural and food marketing/supply chain projects can be contacted at [email protected]

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