The Pacific Alliance, that bring together Chile, Colombia, Mexico and Peru, has attracted much attention from many countries as the most dynamic regional integration scheme in Latin America. The group`s economies have been growing faster than other countries in the region and especially its projection into the East Asia is seen as very interesting. For Peru the Pacific Alliance presents the best opportunity, together with the Free Trade Areas that it has signed with several Asian countries, to have greater economic relations with Asia, but specially to diversify it exports, now concentrated mainly in primary goods, as mineral, fishmeal, and natural gas.

1. Pacific Alliance as a platform for
greater economic relations with
East Asia
September 2014
Carlos Aquino
Web site: http://carloskobe2005.wix.com/economia-asiatica
E-mail: carloskobe2005@yahoo.com

2. Introduction
• The Pacific Alliance, that bring together Chile,
Colombia, Mexico and Peru, has attracted much
attention from many countries as the most dynamic
regional integration scheme in Latin America. The
group`s economies have been growing faster than
other countries in the region and especially its
projection into the East Asia is seen as very interesting.
• For Peru the Pacific Alliance presents the best
opportunity, together with the Free Trade Areas that it
has signed with several Asian countries, to have greater
economic relations with Asia, but specially to diversify
it exports, now concentrated mainly in primary goods,
as mineral, fishmeal, and natural gas.

3. Index
• 1. About the Pacific Alliance
• 2. Why the Pacific Alliance could work when
other Latin American schemes have failed?
• 3. Challenges of the Pacific Alliance
• 4. How can Peru use the Pacific Alliance as a
platform for greater economic relations with
East Asia
• 5. Conclusions and recommendations

4. 1. About the Pacific Alliance
• 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.
The group economic growth rate is the highest in Latin
America. In 2012 it was 5%, higher than the global average
of 3.2%.
• 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 has raised great interest and has many
countries as observer states, and seven are from Asia:
China, India, Japan, Korea, Australia, New Zealand and
Singapore (plus Turkey and Israel).

5. 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. In 2014, up to 100 scholarships were given per
country for undergraduate and postgraduate students and
professors.
• - 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, and encourage joint actions towards third party
markets, especially the Asia Pacific.
• - Coordination among the four trade promotion agencies of
the Pacific Alliance (ProMexico, Promperu, ProChile and
Proexport) for joint activities. Among the progress achieved
in this area, the agreement to share offices should be
highlighted. The first of these is already operating in
Istanbul, Turkey”.

6. 2. Why the Pacific Alliance could work when
other Latin American schemes have failed?
• First, PA countries have similar political systems,
democratic institutions. Compared to several other
Latin American countries, as a group Pacific Alliance
countries are more politically and economically stable.
As somebody said, it is based on affinity rather than
proximity.
• Second, they are more or less open economies,
especially Chile and Peru. Mexico and Colombia are
following closely. They have achieved macroeconomic
stability and improved governance.
• 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 Free Trade Area agreements with several
Asian countries.

7. Challenges of the Pacific Alliance
• First, improvement in physical infrastructure is needed.
Connectivity is a problem. Ports, airports, Roads,
Telecommunications networks are still insufficient in some
countries. Also, 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. More commercial offices there for this effort are
necessary
• Fourth, a kind of policy to promote the production of more
value added goods for 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.

8. 4. How can Peru use the Pacific Alliance as a
platform for greater economic relations with
East Asia
• 4.1 Peru trade with PA members
• Trade with other PA member 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 of Chile, Colombia
and Mexico, and 10.6% of Peru´s imports come from them.
Chile is Peru biggest trade partner in the PA, with nearly
US$3 billion in trade.
• In Peru global trade Chile was the seventh most important
export market in 2013. In the import side Mexico was the
fifth most important source of foreign goods for Peru.
• Peru mainly exports primary goods to its partners in PA (but
with increasing exports of more value added goods,
especially to Colombia) and imports from them mostly
manufactured goods.

9. TABLE 1: TOP 11 PRODUCTS EXPORTED TO CHILE, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.htm
PRODUCT Millions of Dollars
FOB value
Total 1,666
Copper ores and
378
concentrates
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
27
more than 16 persons
Kerosene 20

10. PRODUCT Millions of Dollars
FOB value
Total 1,273
Ammonium nitrate for mining
58
use
Chemistry a la past soda or
sulphate, bleached or
34
Other papers and cardboards 34
Parts of machines and apparatus
32
of tariff heading 84.74
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
27
heading 210690290
TABLE 6: TOP 10 PRODUCTS IMPORTED FROM CHILE, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122013.htm

11. 4.2 Peru trade with Asian countries
• One of the aims of the Pacific Alliance is to increase its
trade with Asian countries. Peru in the 1990`s decided to
put emphasis in its relationship with these countries. In
1998 Peru became a member of Asia Pacific Economic
Cooperation forum, APEC, and from the last decade Free
Trade Area, 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. Also partial FTA agreements
are in force with Singapore and Thailand.
• Besides this Peru is in negotiations in the Trans Pacific
Partnership Agreement, TPP, and if this concludes
successfully, it will have FTA agreements with Malaysia and
Vietnam for example (There are twelve members’ countries
in the TPP: Australia, Brunei, Canada, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru, Singapore, USA, and
Vietnam).

12. • It should be noted also that of the 4 members of
Pacific Alliance three, Chile, Mexico and Peru are
members of APEC and as said these three also
have several FTA agreements with some Asian
countries.
• 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)

13. TABLE 7: MAJOR TRADE PARTNERS OF PERU, 2010-2013, IN MILLION OF DOLLARS
Source: Peru`s Customs Office:
http://www.aduanet.gob.pe/aduanas/informae/BalContiZonaPais_01122013.htm
COUNTRY 2010 2010 2011 2011 2012 2012 2013 2013
Expor
ts
Impor
ts
Exports Impo
rts
Export
s
Import
s
Export
s
Import
s
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

14. Graphic 1:
Source: Proinversion: “Why invest in Peru”, August 2013

15. 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)
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
118.78 159.11 147.28 293.0 365.28 261.10 211.29
(Chinese Taipei)
Vietnam 1.62* 2.56 10.64 63.89 77.72 90.43 44.80

16. • In Asia, the most important export markets for Peru are
China, Japan, South Korea and Taiwan
• China is the biggest buyer of Peru iron, copper, zinc,
fishmeal, etc. The twenty most important goods exported
to China constitute 98.2% of the total exported there and
they are mainly mineral, fishery products, and some
gasoline, grapes, wood, and hair from llama or alpaca. Half
of Peru total copper exports go to China and around of 70%
of fishmeal and 100% of iron ore
• As can be seen Peru trade with China, and also with most
Asian countries, is asymmetric in its contents, because Peru
exports mainly primary goods to them, and import from
them mainly manufactured goods.

17. 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
58
tetraethyl
Fresh grapes 45
Other seaweed 35
Strips and friezes for parquet
35
flooring, not assembled
Other Cuttlefish and squid, frozen,
dried
27
Copper waste 19
Other fine hair carded or combed,
from llama or alpaca
19
Other wood swan or chipped
lengthwise, sliced or peeled
17
Other polyethylene terephthalate
with titanium dioxide
17
Fish fats and oil 16
Copper anodes for electrolytic
refining
16
TABLE 9: TOP 20 PRODUCTS EXPORTED TO CHINA, 2013
Source: ADUANAS DEL PERU
http://www.aduanet.gob.pe/aduanas/informae/XPaisPartMensual_01122013.htm

18. TABLE 10: TOP 10 PRODUCTS IMPORTED FROM CHINA, 2013
Source: ADUANAS DEL PERU: http://www.aduanet.gob.pe/aduanas/informae/MPaisPartMensual_01122013.htm
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
84
with titanium dioxide
Other footwear with top of textile
and rubber sole or plastic
84
Other footwear 80
Other wind power generators 69
Other TV sets 76

19. TABLE 11: TOP 20 PRODUCTS EXPORTED TO JAPAN, 2013
PRODUCT Millions of Dollars
FOB value
Total 2,226
Copper ores and concentrates 1,161
Natural gas 333
Other gasoline without lead
183
tetraethyl
Lead ore 134
Zinc ores and concentrates 91
Fishmeal 81
Propane gas 32
Tin, not alloyed 22
Other Cuttlefish and squid,
13
frozen, dried
Butane gas 13
Asparagus 11
Cathode and sections of
11
refined copper cathode
Zinc, not alloyed 10
Other coffee 9
Cuttlefish and squid 7
Fish fats and oil 7
Asparagus fresh and
6
refrigerated
Other Zinc not alloyed 6
Other fish meat 5
Bananas 4
Source:ADUANAS DEL PERU

20. TABLE 12: TOP 20 PRODUCTS EXPORTED TO KOREA, 2013
Source: ADUANAS DEL PERU
PRODUCT Millions of Dollars
FOB value
Total 1,536
Copper ore and concentrates 406
Lead ore and concentrates 299
Natural gas 275
Zinc ore and concentrates 200
Silver ore and concentrates 129
Cathode and sections of
41
refined copper cathode
Other coffee 30
Cuttlefish and squid 21
Zinc, not alloyed 19
Other Cuttlefish and squid,
19
frozen, dried
Propane gas 14
Fresh grapes 12
Copper matte 7
Refined unwrought lead 7
Butane gas 6
Copper waste 6
Other frozen steaks, tents,
4
eels
Fish fats and oil 3
Other frozen fish 2
Fishmeal and pellets 2

21. • What can Peru export besides primary goods to Asia?
• In the last years Peru is experiencing a process of
diversification of its exports. New products, so called
non-traditional exports, are being sold abroad. Among
them are chemical, textiles, but also from the agro
industrial and fishery sectors. As can be seen in Graphic
2, the amount exported of these products increased
five times from 2003 to 2013, from around 2,000
million dollars to 10,000 million dollars.
• Some of the products that Peru export to markets in
Europe, North America and still do not export or does
very little to Asia are the ones show in Table 13:

22. Graphic 2
Source: Proinversion: “Why invest in Peru”, August 2013

23. Table 13: Peru´s non-traditional exports, in million dollars, years 2009 and 2013
Source: Central Bank Reserve of Peru: “Memoria 2013” Table 22
Products 2009 2013
Quinoa 7 79
Tara powder 13 32
Fresh Asparagus 251 412
Fresh Onions 28 63
Grapes 136 450
Avocado 64 185
Mangoes 71 133
Canned fruits vegetables 472 679
Fresh or chilled fish products 13 41
Dairy products 62 112
Cocoa and chocolate 83 152

24. What is needed to sell non-traditional exports to
Asia?
• First, an increase in the supply of the non-traditional
products will be needed to satisfy demand in Asia. It will be
necessary to increase production if we want to sell these in
Asia.
• For example, in the case of quinoa, one of the stars of Peru
non-traditional exports, that has increased its sales from 7
million dollars in 2009 to 79 million dollars in 2013 clearly
efforts to increase the area of production is needed if Peru
wants to sell more. Actually price of this product has
increased
• Some efforts are being done in Peru to increase quinoa
production area. It is said that the PA countries should work
together to present a common export supply to Asia in
several goods, because also the others countries of the PA
alone by themselves could not supply the great demand
that Asian consumers can represent. Chile is planning to
increase its quinoa production also.

25. • Second, to export products like agricultural ones is necessary to
comply with the phytosanitary requirements that Asian countries
demand. Some products from Peru have achieved this in some
markets in Asia. Perhaps at the level of the Pacific Alliance some
common experiences could be shared by some members in this
regards, as in the case of Chile that already export several
agricultural goods to Asia and has approved these phytosanitary
requirements
• Third, to be able to sell to Asia promotion of the exportable supply
is necessary, given that Asian consumers do not know Peru
products. Then the establishment of commercial offices,
participation in food fairs for example, and marketing campaigns
are needed.
• Peru has few commercial offices in Asia compared for example with
Chile. There is a commercial office in Taipei (since 1992) in Tokyo
(since 2000), in China in Beijing (since 2002) and Shanghai. New
ones are being opened in Seoul, Jakarta and New Delhi this year.
Also there is a new one in Istanbul and another in Dubai.

26. • Regarding this aspect of the promotion effort in Asia
the Pacific Alliance is doing some efforts to work
together to jointly promote the group export supply in
Asia. Joint participation of PA countries in food fairs, as
has been done in SIAL China 2014 and in Food Taipei is
something that would help in this aim.
• Fourth, efforts to attract investment from Asia to the
production of goods for non-traditional exports should
be done. There is a growing investment from Asia in
Peru in the last years but sill this is concentrated mainly
in the primary sector, especially in the mineral one.

27. Investment from Pacific Alliance countries
• By the end of December 2013 Peru has a balance of
US$22.6 billion of Foreign Direct Investment, FDI.
Countries from the Pacific Alliance 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.
• But the aim should be to attract investment from Asia in
sectors that produce goods with more value added, as in
the agricultural sector, fishing sectors, and manufacture
in general.

28. TABLE 14: FOREIGN DIRECT 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=institucional
COUNTRY 2013*
UNITED KINGDOM 4,459.1
SPAIN 4,317.6
USA 3,167.7
THE
1,532.8
NETHERLANDS
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

29. Table 15: 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%

30. GRAPH 3: ESTIMATED PORTFOLIO OF MINING PROJECTS BY MAIN INVESTOR, JUNE 2014
Source: Ministerio de Energía y Minas: “Cartera estimada de proyectos mineros, Junio 2013”, page 3

31. • But then a labor of investment promotion is necessary
to let know Asian investors that Peru is a country
where not only natural resources can be extracted.
• In general Peru and the rest of members of Pacific
Alliance are not well known in the Asia region and in
this regard the investment road shows jointly organized
in Asia to promote these countries image are a good
way to fulfill that need.
• In Seoul one of these events, a workshop on promotion
of investment opportunities in the PA countries was
celebrated last September 2nd, as was done one
another last year.

32. • Recently, Peru government has announced a Productive
Diversification Plan, to promote activities with more value
added, in sectors like the mining sector, the agro industrial
sector, the fishery sector, textile and garments, chemical
sector, etc.
• The government is looking for do this by working in three
fields: reduction of cost overruns, the elimination of
excessive regulations to make easier to do business and
promote investment (simplifying administrative
procedures); the improvement of competitiveness of the
industry through the promotion of the adoption of modern
machinery and improvement in labor force skills (Peru has
few graduate in technical areas, engineering and physical
sciences), and the diversification of national production to
sectors that create more value added. .

33. Crecimiento del PBI en varios paises de Latinoamerica
http://www.bcrp.gob.pe/publicaciones/memoria-anual/memoria-2013.html

34. • The idea behind the plan is to introduce new engines
to the economic growth that Peru is experiencing in
the last years, to reduce the dependence in the export
of primary goods, and to create employment of better
quality.
• One of the central ideas of the Productive
Diversification Plan is the development of clusters in
the mining, fishing, agribusiness, tourism, jewelry,
apparel. The one existing are based heavily on natural
endowments, with a need of further upgrading, they
are also shallow, with weak supplier bases and
supporting institutions, and there is a poor
coordination between the private and public sectors

35. • The formation of clusters or value global chains could be done
at the level of Pacific Alliance also. But improvement of
physical infrastructure, connectivity and skilled labor force is
needed.
• There is a need for private businessman to get more involved
in dealing with Asia. The need to known Asia culture,
consumer’s tastes, and Asia businessman idiosyncrasy is
necessary to do business in this region.
• One sector that still is not benefiting from increased
integration with Asia is the tourism sector. In Peru the number
of tourists coming to visit the country many natural and
historical attractions increase year by year. In 2013 nearly 3.2
million tourist arrived, but few come from Asia
• Improvement of facilities for Asian tourists and better
connectivity is needed

36. 5. Conclusions and recommendations
• The PA is an interesting mechanism that compared with
existing economic integration schemes in Latin America has
more probabilities of being successful. Especially its
declared aim for better economic integration with Asia
presents a good opportunity for Peru to achieve just that.
• Peru exports to Asian countries have increased in the last
years but more than 95% of these are primary goods. The
challenge is to export goods with more value added. For
this to happen, increase in the supply of non-traditional
exports that are being already sold in other foreign markets
is need. Also the promotion of these new goods in Asian
markets, where there is no much knowledge of them is
necessary. And the attraction of investment from Asia to
the production of more value added goods also should be
done.

37. • The Pacific Alliance as a group can work in trying to
meet those challenges through the joint supply of
goods, the joint promotion of the export supply, and
the common promotion of investment opportunities in
the PA countries.
• But 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 further challenges ahead

38. • If these can be overcome, the PA could be more
competitive and fulfill its aim of bringing more
prosperity to its citizens.
• In a world where prices of commodities no longer
will be at higher levels, something that benefited
Latin American countries like those of the Pacific
Alliance, the future growth should come from
productivity, investment and efficiency,
something that this group hope to achieve