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Economy

Trump may be boon to Pacific Alliance

The US president's wall could end up strengthening Latin America

SAO PAULO -- Now that U.S. President Donald Trump has decided to trash the Trans-Pacific Partnership, the four-nation Pacific Alliance is courting TPP as well as non-TPP countries -- including China.

Mexico, Chile, Peru and Colombia will hold a ministerial-level meeting on March 14-15 in the central Chilean city of Vina del Mar. They are also inviting their counterparts from the 12 TPP nations, China and South Korea for additional talks.

The aim is to create a transpacific trade bloc.

Japan has concluded bilateral economic partnership agreements with Mexico, Chile and Peru. It is currently negotiating a similar deal with Colombia. As Japan also participates in the Pacific Alliance as an observer, there is a likelihood that the country will attend the meeting.

After Trump on Jan. 23 signed an executive order declaring that the U.S. had withdrawn from the TPP, Chilean Foreign Minister Heraldo Munoz asserted that the TPP is now off the table. He also expressed his intent to seek a new kind of agreement not necessarily bound by the TPP framework.

The four nations are more active advocates of free trade than the rest of Latin America. Chile suggested the ministerial meeting in March and was part of the P4 Agreement, a precursor to the TPP.

Although Chile is one of the world's largest copper producers, its population of 18 million leaves it with a small domestic market.

So the Chilean government seeks trading partners, preferably ones with low or no tariffs.

Since Trump signed that executive order, Chile has felt a sense of crisis.

Four days after the executive order came, the leaders of Peru and Colombia clearly came out in favor of free trade during a summit in Arequipa, southern Peru.

The four countries also value trade relations with Asia. Peruvian President Pedro Pablo Kuczynski told a radio audience that the Pacific Alliance should pursue a free trade pact with countries such as China, India, Australia and New Zealand.

Japanese Prime Minister Shinzo Abe is poised to stress the economic and strategic importance of the TPP hours from now in Washington when he sits down with Trump. However, were the Pacific Alliance to expand to Asia, Abe may have a new option to consider.

Elsewhere

Meanwhile, Brazil and Argentina are now trying to lure Mexico into the Mercosur trade bloc. With Trump's harsh treatment of Mexico, they see an opportunity.

The U.S. president has also signed an executive order calling for "the immediate construction of a physical wall" along the U.S.-Mexico border. He even wants to renegotiate the North American Free Trade Agreement.

NAFTA took effect in January 1994, making it easier for goods and services to flow through Canada, the U.S. and Mexico.

Now Brazil and Argentina are trying to redirect Mexico's attention to the south by dangling the possibility of an integrated Latin American market.

Argentine President Mauricio Macri on Tuesday said 2017 will mark a turning point, with Mexico doing an about-face to better engage Central and South America.

He was speaking at a news conference after meeting with his Brazilian counterpart, Michel Temer, in Brasilia.

Temer also emphasized the importance of market integration, saying Mercosur should seek closer ties with Mexico and the Pacific Alliance. Mexico is currently a Mercosur observer.

Trump has all of Latin America in an uproar, but one that might end up bringing Mexico, a North American country, into South and Central America's orbit. The linguistic and cultural similarities are already there.

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