Pacific Alliance Eyes Expansion But Doubt Cast on Benefits

Leaders of the Pacific Alliance economic bloc are meeting to discuss a future roadmap but free trade agreements promoted by the organization continue to be criticized for not helping developing nations.

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The presidents of Chile, Mexico, Peru, and Colombia are attending the group's 12th biannual summit in the Colombian city of Cali.

They are expected to open their doors to trade partners by creating a new "associate-state" category to strengthen links with 52 observer nations which include Canada, China, Germany, Japan and the U.S.

Plans to expand into high-growth markets have taken on an added urgency this year as the future of established deals, such as the North American Free Trade and the evolving Trans-Pacific Partnership, TPP, hang in the balance.

In January, U.S. President Donald Trump withdrew from the TPP, leaving the remaining members scrambling to rescue the deal or forge new partnerships.

Renegotiating NAFTA is also on the agenda.

Trump has described the 1994 pact as a disaster and has threatened to walk away from it.

It's one of the rare occasions when the White House incumbent is on the same page as unions.

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Social movements in Canada, the U.S. and Mexico say reforms to NAFTA have had a disastrous impact on Indigenous populations, farmers, campesinos, labor unions and migrant groups.

U.S. and Mexican workers alike are said to have suffered major job loss, lower wages and dislocation under the agreement.

The average Mexican worker is making US$1,500 less per year today than in the year before NAFTA.

So the pressure is on the Pacific Alliance to find some potential solutions.

But it has its detractors.

Bolivia's President Evo Morales has said the bloc is a neocolonial tool intended to cripple regional trade initiatives that exclude the U.S.

Morales also referring to it as a “political, military and financial arm of the empire.”

“It seeks to put an end to the regional integration initiatives of Mercosur, UNASUR and CELAC,” President Morales wrote on Twitter last year.

The alliance aims to foster the free circulation of people, goods and services across its territories and constitutes the sixth largest economy in the world.

It was established in 2011 and represents 37 percent of Latin America’s population, 35 percent of its total GDP, 46 percent of its exports, and 50 percent of its imports.

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On Friday, the bloc's leaders will sign the Santiago de Cali declaration to determine the financial roadmap for 2018.

Colombia is taking over the presidency of the bloc and will be overseeing some challenging events in the coming months.

Fitch Ratings says that elections throughout Latin America over the next year could have big implications for credit ratings and the regional economic outlook.

In a recent report, the New York-based rating agency said six countries — including the three largest in the region Brazil, Mexico, and Colombia — will have new presidents, and many incoming leaders will be facing sluggish economic growth and low revenues.

Chile has primary elections this weekend and President Michele Bachelet is in the last months of her presidency with a low approval rating

Her Mexican counterpart Enrique Peña Nieto continues to deal with rising violence, corruption scandals and the latest allegations of election fraud in Mexico City.

While Colombia is implementing the complex peace agreement signed by President Juan Manuel Santos with the Revolutionary Armed Forces of Colombia, the former rebels are criticizing the process for being slow to eradicate paramilitary violence.