Chile's Regional Arrangements and the Free Trade Agreement of the Americas : The Importance of Market Access
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.
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2001-07
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| Subjects: | ADDITIVE REGIONALISM, FREE TRADE AGREEMENTS, FTAA, FREE TRADE AGREEMENT OF THE AMERICAS, GLOBAL FREE TRADE, MARKET ACCESS, TRADE DIVERSION, WELFARE GAINS, |
| Online Access: | http://documents.worldbank.org/curated/en/2001/07/1551966/chiles-regional-arrangements-free-trade-agreement-americas-importance-market-access https://hdl.handle.net/10986/19581 |
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| 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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