Group of 3 (G3): What It Is, How It Works, Legacy

What is the Group of 3?

Group of 3 refers to a ten-year free trade agreement between Mexico, Colombia and Venezuela that began in 1995 and lasted until 2005. The pact covered numerous issues including intellectual property rights, public-sector investments and the easing of trade restrictions.

Venezuela, under the leadership of Hugo Chavez, opted to not continue in the Group of 3 when the original agreement came up for renewal in 2006. Venezuela instead joined Mercosur, another free trade area that predated the Group of 3. When Venezuela left, Colombia and Mexico agreed to continue as free trade partners for roughly nine more years.

Understanding Group of 3 (G3)

The Group of 3 was among several free trade agreements that the government of Mexico entered into, the largest of which was the North American Free Trade Agreement (NAFTA). Mexico was the largest and most influential Group of 3 partner. The pact was part of the Mexican government’s agenda to extend free trade throughout much of Central America, including Peru, Bolivia, and Ecuador.

Notable modifications to the agreement included a decree to boost free trade in additional industries in December 2004 and a change that Mexico and Colombia implemented in August 2011 to reduce tariffs on a range of additional products.

Mexico and Colombia ended their two-way alliance when each entered the Pacific Alliance with Chile and Peru in 2014. The goal of this agreement was to boost trade between all four countries and strengthen economic ties to Asia as each country borders the Pacific Ocean.

Legacy of the Group of 3

The Group of 3 did not last for long, and Venezuela arguably never became a very strong participant in the pact. However, the Group of 3 succeeded in boosting trade between Mexico and Colombia.

The Group of 3 did aid the region’s energy and utility sectors. One of the Group of 3's first projects was to link both power grids and gas pipelines from Mexico to Colombia and Venezuela. In October 2007, a gas pipeline opened between Colombia and western Venezuela, providing the opportunity for gas to flow to areas where it was not previously accessible.

From Mexico’s perspective, the Group of 3 became part of a strategy to open its trade policies in an effort to significantly boost exports. The Group of 3 offered Mexico a way to leverage labor markets throughout the region to produce finished goods that could then be sold into the United States and Canada via NAFTA. The Group of 3 did help to strengthen Mexico’s position as Central America’s most important trading partner, although other trade agreements arguably helped Mexico far more. The Group of 3 weakened partly due to other regional trade agreements as well as bilateral agreements between countries in Central America and the U.S.

Conversely, Colombia and Venezuela seemed to have hoped that the Group of 3 would provide an eventual entry for them to join NAFTA; this never occurred.