MercoPress. South Atlantic News Agency

Chile insists with Pacific Alliance/Mercosur intelligent convergence

“We're making concrete strides so that our markets are connected, generate competition, more investment and better opportunities” said minister Valdés

Chile will insist at the two-day Pacific Alliance summit which took off on Wednesday in Paracas, Peru, that a convergence with Mercosur is needed to ensure the integration of Latina America, and this is more evident now that both groupings face similar challenges such as falling prices for commodities, normalization of US monetary policy and an international context of slow growth.

 “We're making concrete strides so that our markets are connected, generate competition, more investment and better opportunities for all of us”, said Chilean Finance minister Rodrigo Valdés back from an Alliance ministerial meeting on finance that took place in Mexico City ahead of Peru's summit.

Among the advances mentioned by Valdes are the Integrated Latin American Markets, which brought together Chile, Peru, Colombia and Mexico stock markets under the MILA; fiscal homologation accords to avoid double taxes and infrastructure cooperation, all of which lead to “the consolidation of the brand Pacific Alliance”.

Chile which last year was only second to Brazil in reception of direct foreign investment, 23bn dollars, also figures in the list of the twenty countries which most invests overseas, according to the World Investment report from UN.

And with these credentials Chilean president Michelle Bachelet has insisted in the need for convergence between the Pacific Alliance and Mercosur, since according to her own words, “we're going through a historic moment to set the foundations for the union of the two blocks”.

”Finding convergence between two integration mechanisms, different but with similar targets must be a reality. We can't give the image that in this region the two coasts (Pacific and Atlantic) live back to back“, underlined Bachelet.

Chile is aware of the limitations to act as a bridge between the two blocks but foreign minister Heraldo Muñoz, ”we must act pragmatically and with the political determination to overcome obstacles“.

So far the main achievement has been the 'short list', which includes concrete targets such facilitating trade; an only window for exports; electronic certifications; origin documents and persons' movements.

Chile's position is that beyond the trade field, the Pacific Alliance and Mercosur are interested in improving the productivity of their economies; and this requires cheaper energy; better infrastructure; fluid communication; modern ports and overcome the backpack of exporters of natural resources.

”The intelligent convergence between Mercosur and the Alliance is targeted to bring down the invisible wall that separates countries on the Pacific and on the Atlantic. It's not a useless initiative as some preach: dialogue and intraregional convergence are not an option but a necessity“, underlined Muñoz.

According to Chile the different monetary policies and international insertion are not in reality an obstacle for specific mutually beneficial agreements. ”Only ideology can lead to reject convergence of diversity. The meeting of the two blocks has unequivocal fundamentals”.

Mercosur members, particularly Brazil and Argentina (plus Paraguay, Uruguay and Venezuela) represent 56% of the region's GDP which added to the Pacific Alliance total 92%. And even when inter-region trade in Latin America only adds up to 18%, the two-oceans condition connects the region strategically to the world's main production and consumption centers.