THE PACIFIC ALLIANCE MEETING -- ASIA'S PIVOT?

"This is going to be the first meeting on how we go forward."

Paulina Nazal

March 9, 2017 (publication date)

First some definitions. The speaker, Paulina Nazal, is the Director for Multilateral Economic Affairs in Chile's General Directorate on Economic Relations. Today's quote is from a recent interview she did with Reuters, and the meeting she was talking about is the Pacific Alliance meeting which starts tomorrow in Viña del Mar, Chile's most popular beach resort, and which is scheduled to wrap up on Thursday, March 16. The word "since" does not appear in today's featured quote. Implicitly, however, it is there. We take Ms. Nazal's comment to mean that this will be the first meeting since January 27, when  President Trump formally took the United States out of the Trans-Pacific Partnership Agreement and negotiation. 

Convened by Chile, which currently holds the revolving presidency for the Pacific Alliance, this is one meeting where the invited guests will be every bit as important to the outcome as the convening organization. That in no way diminishes the significance of the Pacific Alliance, which currently has four members-Mexico, Chile, Colombia and Peru. All of the TPP countries have been invited. China will be there. For that matter, so will the United States, which will be represented by the U.S. ambassador to Chile, Ambassador Carol Perez.
Described as a "High Level Dialogue on Integration Initiatives in the Asia-Pacific Region," this week's meeting in Viña del Mar could just be another eminently forgettable gathering of diplomats. It has the potential, however, to be much more. While it is unlikely to produce a clear collective decision on next steps for the region, it could well move the participating countries more toward one option and away from others. 

 
Among the options they will be dealing with are:

Broader integration based on TPP. We assume Australia will be making the case for that approach. Steven Ciobo, Australia's Minister for Trade and Investment said as much recently: 

 
What I will absolutely not do is pull down the [shutters on TPP] and say "that's it, game over." 

The RCEP Option. The China-led Regional Comprehensive Economic Partnership would seem to be an option, and it will doubtless be discussed.

China and the FTAAP (the Free Trade Area of Asia Pacific). Despite China's role in the RCEP negotiations, it is not at all clear that RCEP is what China will be pushing at the Pacific Alliance. For sure, though, China will not be in the TPP camp. More to the point, China's views, whatever they are, will be listened to attentively. Yin Hengmin, a former ambassador to Mexico and now China's Special Envoy for Latin America, will lead the Chinese delegation. He shouldn't have any trouble getting the group's attention.

Until there is more, we're relying on today's press conference in Beijing with Foreign Ministry spokesperson Hua Chunying for our sense of China's intentions. Here is the question she got on the Pacific Alliance meeting and her response. As usual, we have highlighted the bits we found particularly striking: 

Q: It is reported that Chile will hold the High-level Dialogue on Integration Initiatives in the Asia-Pacific Region soon. Who will China send to attend, and what expectations does the Chinese side have for this meeting.

A: At the invitation of Chile, rotating President of the Pacific Alliance, the Special Representative for Latin American Affairs of the Chinese Government, Ambassador Yin Hengmin, will lead a delegation to attend the High-level Dialogue on Integration Initiatives in the Asia-Pacific Region to be held in Chile from March 14 to 15.

I need to point out that this meeting is a high-level meeting of the Pacific Alliance and Asia-Pacific countries on Asia-Pacific economic integration, where extensive exchange of views will be conducted on the next step of Asia-Pacific regional cooperation. It is not a TPP meeting, as is described by some media. China hopes this meeting will contribute to the FTAAP process, the open Asia-Pacific economy and Asia-Pacific regional economic integration. On TPP, China's position has not changed.

It is understandable that America's withdrawal from TPP is a dominant theme if not the headline for many of the stories about this week's meeting in Chile. The fact is, however, that there are several different yarns in this tapestry, each of which is, in effect, a separate discussion. 

 
To start, there is the story of the Pacific Alliance. It was only an idea in 2011 and still has just four members, but it accounts for 36 percent of South America's GDP and and seems destined to grow rapidly in both size and importance. Costa Rica and Panama are the likely next members. 

Then there is the separate and quite dramatic story of China's growing trade and eye-popping investments in Latin America and the Caribbean.  To quote from one article among many, this one by Rebecca Ray and Kevin Gallagher: 

Since the turn of the millennium, China has soared in importance as an economic partner for Latin America and the Caribbean.

And there is more in the offing. Already Latin America's second largest trading partner after the United States, China has said it plans to significantly increase both trade and investment with the region. The targets are $250 billion in investment and $500 billion in annual two-way trade by 2019.

Lastly, at least for this short list, there is the long and difficult history of  U.S. relations with the countries of Latin America. We suspect that even if the current administration's challenges to Mexico were more understated than the wall and NAFTA revisions, the outpourings of solidarity from Central and South America would be as strong.

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All that adds up to a list of compelling reasons for paying close attention to this week's meeting in Chile. There is not much we can add at this point, but we do have one small quarrel with the preparatory press reports. It is with this sentence from John Lyons' story today in The Wall Street Journal online, where he wrote: