The UK’s Relationship with the Pacific Alliance (International Relations Committee Report)

Viscount Waverley Excerpts

Monday 1st February 2021 Grand Committee

[Viscount Waverley (CB)]

My Lords, I follow the noble Baroness, Lady Hooper, whose good name is synonymous with Latin America. I also join with the noble Lord, Lord Hannay, in underlining the need to have a quicker turnaround on these reports and parliamentary ratifications. I remind the House of my declarations in the register.

My question until yesterday morning would have been what plans—and over what period—the Government’s has for a strategy beyond the EU, on the UK’s relationship with regional trade blocs, or whether we can now take it that the CPTPP is a trend and a template for the future. While I congratulate the Government for a job well done, there is a concern being expressed by some that our entry will be largely on CPTPP terms.

Some time back, I penned an article on the Pacific Alliance for a business magazine, Capital Finance International, with the strapline, “Going from strength to strength, but can it keep it up?”. My conclusion was that the future is bright, illustrated by core commitments to free trade, integration and democracy as a driving ambition. Investors have recognised multiple growth areas, in addition to the plans for stronger international relations in a 2030 vision. A driving dynamic with four strategic objectives for 2021, with Colombia in the chair, are to create a more integrated, global, connected, entrepreneurial and citizen-orientated alliance, with recognition by the four heads of government that a response to the current situation must focus on economic reactivation by promoting SME linkage, not just within their respective countries but beyond.

I urge UK SMEs to factor in and embrace the concept of local content and source partnership opportunities with like-minded organisations within the bloc, not least as regulatory alignment and procedures are to be simplified to facilitate product flows between Chile, Colombia, Mexico and Peru, and as e-commerce and public procurement opportunities are to be promoted so that companies within the bloc can participate in public tenders. Additionally, the region provides diverse local demand, with diversity as a strength that encourages the establishment of new businesses, especially those that cater to goods and services for neighbouring markets.

While evidence of success is positive, challenges do remain. However, protests in Chile and Colombia, corruption allegations against certain heads and influential Mexican narcotic cartels have not diminished investor confidence. Indeed, Mexico will become a prime beneficiary of further regional integration as Mexican companies will become more competitive in global markets, which in turn would further synchronise standards across Latin America’s largest economies, bringing better-harmonised supply and value chains with them. I would encourage Mexico to assign an ambassador to the UK and would certainly welcome that. It has been a long time in coming.

Individual economies blend well together, combining commodity dependency with Mexico’s huge manufacturing base, core industries of mining, agriculture, manufacturing and tourism, and emerging industries such as financial services. Chile is gradually replacing fossil fuels with solar energy. Peru is investing in new pipelines to pump water into its coastal desert regions, transforming arid land into fertile agricultural areas, and is to be accompanied by ambitious energy projects, major road networks and railway infrastructure. The alliance is also taking full advantage of global trends, not least by exporting a drive in alternative agricultural crops. Finally, looking beyond the Pacific, the alliance is deepening a partnership with the EU through a joint declaration signed in New York.

Time does not permit detailed comment on any future China relationship with the CPTPP, other than to hope that current impasses will not hamper this most welcome association of the UK to a fascinating part of the world, full of opportunity. However, a moment in time might arise when the United Kingdom needs to determine policy to not be in a disruptive fashion, when or if future partners wish to build closer relationships with China. But that is a discussion for another day.