The members of the nascent group also aim to promote free market policies as the key to economic growth, attract more foreign investment and integrate their capital markets and energy networks.

At a meeting in the city of Cali, Colombia, the presidents of the four member countries agreed to remove tariffs on 90% of the goods traded between them, and to eliminate duties on the remaining 10% in the medium term.

The tariffs will be lifted in July, Colombia's President Juan Manuel Santos told a press conference after the summit. Santos was handed the chair of the bloc by Chilean president Sebastian Piñera for the next twelve months.

“The door to our destiny is the construction of an area of deep integration that will allow us to become part of the global economy more successfully and more forcefully - particularly in the Asia Pacific region,” Santos told reporters.

The cluster of nations includes some of Latin America's fastest-growing economies. They have a combined population of 210 million and their total GDP accounts for more than a third of Latin America's GDP, said Santos, dubbing the Alliance the “new economic and development motor” of the region.

The Pacific countries are free-trade advocates contrary to what is going on along the Atlantic, where Mercosur states have been more reluctant to drop barriers to trade, have been accused of protectionism and pretend governments should play leading roles in different areas of the economy.

Robust economic growth, high commodity prices and explosive domestic demand have lured high levels of capital to much of Latin America in the past decade. But the shaky global scenario, characterized by persistent uncertainty and low growth will likely dampen demand for commodities in the near future.

Likewise despite recent moves by Latin American nations toward “regional integration,” there are bitter internal differences over trade policy.

The Pacific Alliance will aim to gain more clout in Latin America by promoting free trade and focusing on fast-growing Asian economies as an alternative to the protectionist policies championed by Mercosur members such as Argentina, Venezuela and Brazil.

Even though it is only a year old, the Pacific Alliance seems to be gaining momentum. Costa Rica, Panama and Guatemala have already expressed a desire to become members.

The group's progress may be helped by the death of Venezuelan President Hugo Chavez, who spearheaded a batch of populist nations that rejected US “imperialism” and free trade, and are suspicious of the private sector.

However the group is also committed to trimming the huge gap between rich and poor in Latinamerica. Peruvian president Ollanta Humala and Mexico’s Enrique Peña Nieto referred to the most urgent social problems the group faces.

“Today the big challenge for Latinamerica is closing the inequality gap, we are not the poorest region, we are the most unequal in the planet”, said Humala who underlined that the duty of governments and the Alliance is “forging opportunities to create wealth and well-being”.

Peña Nieto said that the four Alliance countries and the nine observers, Costa Rica, Guatemala, Panama, Uruguay, Spain, Japan, Australia, New Zealand and Canada have before them “the great opportunity of strengthening growth and development which will lead to improved prosperity conditions”

More emphatic Chile’s Piñera said that Latam does not have much more time to comply with the ‘legitimate aspirations of our peoples to definitively erase poverty”.

The significance of the summit was also highlighted by a parallel business forum with representatives from 400 of the leading corporations in Latam, and the fact that other leaders attended the Cali meeting, among them Spanish President Mariano Rajoy; Costa Rica president Laura Chinchilla; Guatemala president Otto Perez Molina, Canadian Prime Minister Stephen Harper and Uruguayan Vice-president Danilo Astori.