The importance of the Pacific Alliance in the trade relations of Chile

In 2011 Chile, Colombia, Mexico and Peru have established the Pacific Alliance. The organization pursues economic integration, liberalisation of trade and investments, and elimination of tariff and non-tariff barriers to trade. The aim of this thesis is to find out how the trade in goods and services between Chile and the states of Pacific Alliance developed after the establishment of the organization, to discover the factors that affected this development, and to point out the areas with the potential for the future. The thesis discusses the concept of preferential liberalisation and its impact, the regional agreements in Latin America, and the Pacific Alliance, its characteristics and some of its projects. The thesis examined the changes of Chile’s trade in goods with the Pacific Alliance member states between 2006 and 2021. Average exports and imports of specific articles were compared between 2006-2010 and 2011-2021. It was found that Pacific Alliance member states trade little with each other, and that trade between member states declined slightly after the organization was established. This is because most of the tariff barriers were eliminated before the organization was established, and that Pacific Alliance countries are not natural trading partners. However, there has been an increase in Chile's trade with partner countries in certain high value-added sectors, such as chemical industry. In some sectors, there has also been a strengthening of intra-industry linkages in trade between Chile and partner countries. Trade in services has been found to be of increasing importance to Chile, and liberalisation of trade in services is likely to be of greater value to member countries than trade in goods. Future potential could lie in countries specialising in certain industries, and in developing trade in services.