En el Seminario sobre la Alianza del Pacifico, Fundacion Konrad Adenauer, Santiago de Chile, 2 de junio 2014 Carlos Aquino Rodriguez Professor, San Marcos National University

1. INTEGRACIÓN ECONÓMICA REGIONAL EN EL CASO DE LA ALIANZA DEL
PACÍFICO:
EL ROL DE LATINOAMÉRICA EN LA
GLOBALIZACIÓN
LA VISION DEL PERU
En el Seminario sobre la Alianza del Pacifico, Fundacion
Konrad Adenauer, Santiago de Chile, 2 de junio 2014
Carlos Aquino Rodriguez
Professor, San Marcos National University
E-mail: carloskobe2005@yahoo.com
Website, Facebook, Blog, Linked in

2. Index
• I. Introduction
• II. Objectives and Benefits of the Pacific Alliance
(PA)
• III. Why the PA could work when other Latin
American schemes have failed?
• IV. Challenges of the PA
• V. Peru situation in the PA and challenges ahead
• VI. Conclusions

3. I. Introduction
• Established in June 6, 2012 when the Presidents of
Colombia, Chile, Mexico and Peru signed the Pacific
Alliance Framework Agreement, in the fourth Summit of
the Pacific Alliance in Chile, this block constitute 35% of
Latin America GDP, its economic size is around US$2.2
trillion. They have a combined population of 209 million,
36% of Latin America, with a GDP per capita of US$10,000.
• They account for 50% of trade in the region, with exports of
US$556 billion and imports of US$551 billion in 2012. They
represent 26% of investments flows in Latin America.
• The Pacific Alliance raises great interest and has many
members’ observer states, and from Asia there are five:
China, Japan, Korea, Australia and New Zealand.

4. II. Objectives and Benefits of the
Pacific Alliance (PA)
• The objectives are:
• “To construct, in a participatory and consensual
manner, an area of profound market-driven economic
integration that will contribute to the free movement
of goods, services, capital and persons.
• To promote the growth, development and
competitiveness of the Parties’ economies, with the
objective of achieving greater welfare and overcoming
socioeconomic inequalities.
• To become a platform for economic and commercial
integration as well as political coordination with global
outreach, particularly towards the Asia Pacific.”

5. • The PA seeks to achieve:
• In the field of trade and integration, the elimination of tariffs, reach
agreement on rules of origin, technical barriers to trade, sanitary
and phytosanitary measures, trade facilitation, and customs
cooperation. It should be noted that elimination of duties on 92%
of products have already been achieved.
• Services and capital, seeks agreement on themes of e-commerce,
investment negotiations, cross-border trade in services,
telecommunications, air and maritime transport. The unification of
stock exchange is also in agenda. Already the stock exchanges of
Lima, Santiago and Bogota are linked together in the MILA scheme.
• Cooperation, the platform for students and academic mobility, the
network for scientific research on climate change, medium and
small enterprises, physical interconnection, and the mutual
cooperation fund
• Movement of business People and Facilitation of Migration

6. • The main achievements of PA are said to be:
• “- Elimination of the visa requirement for Colombian and
Peruvian nationals travelling to Mexico to undertake
remunerated activities for up to 180 days.
• - Establishment of the Platform for academic and student
mobility.
• - Creation of the Pacific Alliance Business Council, with the
objective of promoting the Pacific Alliance, as well as make
issue recommendations and suggestions for improved
integration
• - Coordination among the four trade promotion agencies of
the Pacific Alliance (ProMexico, Promperu, ProChile and
Proexport) for joint activities.”

7. III. Why the PA could work when other
Latin American schemes have failed?
• The members of the PA share some common characteristics that
could help them work better and succeed where other attempts of
economic integration in the region has failed or not advanced
much.
• First, PA countries have similar political systems, democratic
institutions.
• Second, they are more or less open economies, especially Chile,
Peru and Mexico, and Colombia is following closely.
• Third, they share an interest in having close relationship with Asian
countries, the region with the fastest economic growth in the
world. Most of them have already FTA agreements with several
Asian Countries. Here Chile and Peru are ahead of Colombia and
Mexico (Colombia and Mexico has a bigger manufacturing base that
they try protect from foreign competition).

8. IV. Challenges of the PA
• For the PA scheme to succeed it would be necessary
• First, improvement in infrastructure is needed. Connectivity is a
problem. Ports, airports, Roads, Telecommunications networks are
still insufficient in several places. Second, a more educated
workforce is needed, to attract investment in manufacture.
• Second, more direct transportation links to Asia is needed, with
more shipping and airline connections.
• Third, more efforts to promote the country’s image and increase its
trade, tourism, and investment in Asia is needed.
• Fourth, a kind of policy to promote the production of more value
added goods to export to Asia or among them is needed. Formation
of a regional value chain, as seen in the East Asia region for
example, is needed.

9. V. Peru situation in the PA and
challenges ahead
– V. 1 Peru trade with PA members
• Trade with PA countries accounted for 9% of Peru´s total trade in
the year 2013. Around 8.2% of Peru´s total exports went to the
three countries, and 10.6% of Peru´s imports come from them.
Chile is the biggest trade partner, with nearly US$3 billion of trade.
Peru has a trade deficit of US$1.19 billion with PA countries, of
which US$1.3 billion was with Mexico, US$628 million with
Colombia, but a trade surplus with Chile of US$ 340 million.
• Chile was the seventh most important export market for Peru in
2013. In the import side Mexico was the fifth most important
source.
• Peru mainly exports primary goods to its partners in PA (but with
increasing exports of more value added goods, especially to
Colombia) and import from them mostly manufactured goods.
Below are the main products that Peru exports to and imports from
them.

10. PRODUCT Millions of Dollars
FOB value
Total 1,666
Copper ores and
concentrates
378
Molybdenum 178
Oil 122
Fishmeal 92
Sulfuric acid 87
Ceramic tile 60
Kerosene type jet fuel 41
Fish fat and oils 30
Other bars in other hot steel 27
Vehicles for transport of
more than 16 persons
27
Kerosene 20
TABLE 1: TOP 11 PRODUCTS EXPORTED TO CHILE, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.

11. PRODUCT Millions of Dollars
FOB value
Total 837
Refined copper wire 118
Other polymer plates of
polypropylene
31
Other gasoline without lead
tetraethyl
29
Cylinder preformas 23
Unroasted coffee,
decaffeinated
23
Kerosene type jet fuel 22
Rice milled or wholly milled 22
Unalloyed zinc 20
Print advertising and similar
commercial catalog
20
Other unalloyed zinc 15
Undenatured ethyl alcohol 15
TABLE 2: TOP 11 PRODUCTS EXPORTED TO COLOMBIA, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.

12. PRODUCT Millions of Dollars
FOB value
Total 507
Natural gas, liquid 209
Kerosene type jet fuel 30
Natural calcium phosphates 29
The other paprika 14
Radial tire used in passenger
car and racing
12
Wood nut 9
Cuttlefish and squid 5
Mobile Phones 5
Bulldozers 5
Other plywood of Bamboo 5
Other polymer plates of
polypropylene
4
TABLE 3: TOP 11 PRODUCTS EXPORTED TO MEXICO, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.htm

13. PRODUCT Millions of Dollars
FOB value
Total 1,742
Other TV sets 273
Road tractors 174
Other motor vehicles with
piston
88
Digital process units 85
Shampoos 52
Mobile Phones 49
Portland cement 29
Diesel vehicles for freight load 29
Washing machines 25
Polyvinyl chloride, not mixed
with others substance
24
TABLE 4: TOP 10 PRODUCTS IMPORTED FROM MEXICO, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.htm

14. PRODUCT Millions of Dollars
FOB value
Total 1,411
Crude oil 229
Sugar 64
Polypropylene, in primary
forms
49
Bituminous coal 32
Perfumes 36
Other drugs for human use 32
Tampons 25
Other motor vehicles with
piston
23
Toilet soap 22
Other rigid tubes 19
TABLE 5: TOP 10 PRODUCTS IMPORTED FROM COLOMBIA, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122013.htm

15. PRODUCT Millions of Dollars
FOB value
Total 1,273
Ammonium nitrate for mining
use
58
Chemistry a la past soda or
sulphate, bleached or
34
Other papers and cardboards 34
Parts of machines and
apparatus of tariff heading
84.74
32
Other woods sawn or chipped 29
Newsprint in rolls or sheets 29
Mackerel, frozen 28
Malta unroasted 26
Fresh apples 26
Other preparation of tariff
heading 210690290
27
TABLE 6: TOP 10 PRODUCTS IMPORTED FROM CHILE, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122013.htm

16. – V.2 Peru trade with Asian countries
• One of the aims of the PA is to increase its trade with Asian
countries, the region with the highest economic growth
rates since many years ago. Peru in the 1990`s decided to
put emphasis in its relationship with these countries. In
1998 Peru became a member of APEC forum, and from the
last decade FTA agreements were signed with several of
them. In 2010 it was with China, in the year 2011 with
Korea and in 2012 with Japan.
• Peru trade with Asia has increased specially from the last
decade. Exports of primary goods, minerals and fishmeal,
has leaped to the point that China become Peru biggest
export destination and trade partner three years ago
(2011).

17. COUNTRY 2010 2010 2011 2011 2012 2012 2013 2013
Exports Imports Exports Imports Exports Import
s
Exports Imports
1. U.S.A 6,087 5,811 5,903 7,350 6,175 7,916 7,306 8,783
1. China 5,436 5,140 6,963 6,325 7,848 7,802 7,331 8,379
1. Japan 1,790 1,336 2,174 1,314 2,575 1,499 2,226 1,433
1. Canada 3,329 539 4,232 583 3,445 588 2,692 615
1. Switzerl
and 3,845 118 5,937 150 5,074 154 2,967 158
TABLE 7: MAJOR TRADE PARTNERS OF PERU, 2010-2013, IN MILLION OF DOLLARS
Source: Aduanas del Peru:
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122013.htm

18. Country/Econo
my
1993 1997 2003 2010 2011 2012 2013
World Total 3,344.40 6,741.75 8,939.82 35,073.25 46,386.03 45,846.18 41,511.7
Australia 14.99 16.31 53.12 117.5 115.35 99.50 130.37
South Korea 59.36 91.50 176.34 894.9 1,696.09 1,545.35 1,536.38
China 140.84 490.06 676.96 5,425.9 6,972.64 7,848.97 7,331.44
Philippines 31.99* 47.96 11.06 123.41 109.75 55.23 128.11
Hong-Kong 28.60 68.82 30.31 78.5 93.24 96.54 84.22
Indonesia 32.62* 36.33 22.67 36.61 61.49 101.18 105.31
Japan 299.04 473.57 391.16 1,790.4 2,174.76 2,575.33 2,226.72
Malaysia 57.33* 59.77 5.51 8.43 6.75 27.68 56.29
New Zealand 1.50 - 3.72 13.5 18.63. 25.82 22.55
Russia 9.90 9.48 14.18 57.9 78.80 88.43 149.76
Singapore 1.68* 11.96* 16.15 6.66 7.94 21.46 20.18
Thailand 11.71* 36.23 26.71 98.10 264.76 234.06 138.25
Taiwan (Chinese
Taipei)
118.78 159.11 147.28 293.0 365.28 261.10 211.29
Vietnam 1.62* 2.56 10.64 63.89 77.72 90.43 44.80
TABLE 8: PERU EXPORTS TO ASIAN MEMBERS OF APEC (IN MILLION OF DOLLARS)
(FOB VALUE)
*Year1994
Source: Aduanas del Perú: http://www.aduanet.gob.pe/aduanas/informae/2012/generales/ExpoImpoPorContiZonaPais.html
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122013.htm
PROMPERUSTAT http://www.siicex.gob.pe/promperustat/frmRanking_x_Pais.aspx (For data before the year 2000)

19. PRODUCT Millions of Dollars
FOB value
Total 7,331
Copper ores and concentrates 3,338
Copper cathodes 1,020
Fishmeal 856
Iron ore 855
Zinc ore 203
Lead ore 195
Silver ore 182
Zinc, not alloyed 100
Cuttlefish and squid 91
Other gasoline without lead
tetraethyl
58
Fresh grapes 45
TABLE 9: TOP 11 PRODUCTS EXPORTED TO CHINA, 2013
Ores and Fishmeal (8 products): 92% of total
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.htm

20. PRODUCT Millions of dollars
CIF Value
Total 7,921
Mobile Phones 730
Data processing machine 459
Motorcycles 136
Vehicles 111
Telecommunications devices 98
Other polyethylene
terephthalate with titanium
dioxide
84
Other footwear with top of
textile and rubber sole or
plastic
84
Other footwear 80
Other wind power
generators
69
Other TV sets 76
TABLE 10: TOP 10 PRODUCTS IMPORTED FROM CHINA, 2013
Source: ADUANAS DEL PERU: http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122013

21. – V.3 Investment from PA countries
• By the end of December 2013 Peru has a balance
of US$22.6 billion of Foreign Direct Investment,
FDI. Countries from the PA are among the major
investors. Chile is in fifth place, Colombia is in the
seventh and Mexico in tenth place. Most of FDI in
Peru are in the Mining (23.9% of total), Finance
(18.6%), Communications (17.3%), Industry
(13.7%) and Energy (12.1%) sectors. These five
sectors account for 85.6% of the FDI in Peru.

22. COUNTRY 2013*
UNITED KINGDOM 4,459.1
SPAIN 4,317.6
USA 3,167.7
THE
NETHERLANDS
1,532.8
CHILE 1,422.1
BRAZIL 1,169.5
COLOMBIA 1,067.8
PANAMA 937.3
CANADA 853.5
MEXICO 476.8
SWITZERLAND 455.0
SINGAPORE 365.5
LUXEMBURG 272.4
JAPAN 238.4
FRANCE 220.5
CHINA 208.1
GRAND TOTAL 22,614.7
TABLE 11: DIRECT FOREIGN INVESTMENT BALANCE AS CAPITAL CONTRIBUTION, BY COUNTRY OF DOMICILE,
(IN MILLIONS OF US$)
*Stock updated until December 2013
Source: Proinversion: http://www.proinversion.gob.pe/modulos/LAN/landing.aspx?are=1&pfl=1&lan=9&tit=

23. Table 12. Direct Foreign Investment flows in Peru
(in millions of US$)
Source: Proinversion
YEARS
BCRP DIRECT
FOREIGN
INVESTMENTS
VARIATION
1995 2,557.0
1996 3,471.1 35.8%
1997 2,139.3 -38.4%
1998 1,643.9 -23.2%
1999 1,940.0 18.0%
2000 809.7 -58.3%
2001 1,144.3 41.3%
2002 2,155.8 88.4%
2003 1,335.0 -38.1%
2004 1,599.0 19.8%
2005 2,578.7 61.3%
2006 3,466.5 34.4%
2007 5,491.0 58.4%
2008 6,923.7 26.1%
2009 6,430.7 -7.1%
2010 8,454.6 31.5%
2011 8,232.6 -2.6%
2012 12,239.7 48.7%
2013 2/ 11,108.0 -9.2%
2014 2/ 9,400.0 -15.4%
2015 2/ 9,435.0 0.4%

24. GRAPH 1: ESTIMATED PORTFOLIO OF MINING PROJECTS BY MAIN INVESTOR,
JANUARY 2014 Source: Ministerio de Energía y Minas: “Cartera estimada de proyectos mineros, Enero 2014”, page 3

25. • Moreover, on April this year the company resulting from
the merger of Glencore and Xstrata agreed to sell the
copper project Las Bambas located in Apurimac, and sold it
for $5.85 billion to a Chinese consortium led by MMG Ltd.,
which is owned by China Minmetals, and included Guoxin
International Investment Corp. and Citic Metal Co. When
the mine come into production it could increase by more
than a third the amount of copper produced in Peru.
• Also in November 13 2013 it was announced that CNPC
through is listed company PetroChina bought Petrobras
Peru unit for $2.6 billion. The Chinese firm bought all the
shares of Petrobras Energia Peru S.A., which has three oil
and gas fields in Peru.

26. • V.4 Challenges ahead for Peru
• To take full advantages of the opportunities in the PA Peru
needs to:
• Investment in infrastructure of transport and skilled labor
force (primary and secondary education is not good, sadly
Peru appears in the last place in the PISA education evaluation
system of 65 countries)
• Improve institutional framework, with a better judicial system,
a meritocratic system of government (to spend more
efficiently), and less regulation by the government.

27. • The government has announced a Productive Diversification
Plan, to promote activities with more value added. Peru has
big opportunities in the mining sector, the agro industrial
sector, the fishery sector, textile and garments, chemical
sector, etc. Plenty of challenges here remains, as for example,
with the scarcity of water, of skilled labor force, cold chain (in
the agro industry sector), of many regulations, connectivity
(transport links), etc.
• Increase its red of commercial offices in Asia. Up to now there
are only offices in Tokyo (Japan): in Taipei (Taiwan); in Beijing
and Shanghai (China). Soon offices will be opened in Seoul,
and in Jakarta
• Private sector should be more involved in the effort to do
more business with Asia

28. VI. Conclusions
• Next June 19 and 20 there will be a Presidential Summit of
AP countries in Mexico. Still the PA agreement has not been
approved in some countries.
• The political will to take advantage of the PA seems to be
there. The question is to implement the policies to make it
work.
• The improvement of physical and human infrastructure, the
elimination of remaining barriers to trade, the
improvement in the institutional environment (better
judicial system, a better political system, etc.), and the need
to know better the Asian markets are challenges ahead. All
these measures would make the PA more competitive.