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Chile's regional arrangements and the Free Trade Agreement of the Americas : the importance of market access, Volume 1

Author:	Harrison, Glenn W.; Rutherford, Thomas F.; Tarr, David G.;	Collection Title:	Policy, Research working paper ; no. WPS 2634
Country:	Chile;	Date Stored:	2001/08/10
Document Date:	2001/07/31	Document Type:	Policy Research Working Paper
Language:	English	Major Sector:	(Historic)Economic Policy
Region:	Latin America & Caribbean	Report Number:	WPS2634
Sub Sectors:	Trade	SubTopics:	Rules of Origin; Environmental Economics & Policies; Economic Theory & Research; Payment Systems & Infrastructure; Trade Policy; Free Trade; Trade and Regional Integration
Volume No:	1

Summary: Using a multisector, computable general equilibrium model, the authors examine Chile's strategy of negotiating bilateral free trade agreements with all of its significant trading partners (referring to this policy as additive regionalism). They also evaluate the Free Trade Agreement of the Americas (FTAA) and global free trade. Among Chile's bilateral regional agreements, only Chile's agreements with "Northern" partners provide enough market access to offset the costs to Chile of trade diversion. Because of preferential market access, however, additive regionalism is likely to provide Chile with many times as many gains as the static welfare gains from unilateral free trade. The authors find that at least one partner country loses from each of the regional trade agreements they consider, and excluded countries as a group they always lose. They estimate that the FTAA produces large welfare gains for the members, with the European Union being the big loser. Gains to the world from global free trade are estimated to be at least 36 times greater than gains from the FTAA. Even countries of the Americas in aggregate gain more from global free trade than from the FTAA.


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