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The Free Trade Agreement between Chile and the EU: Its Potential Impact on Chile´s Export Industry

  • Felicitas Nowak-Lehmann D.


    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

  • Dierk Herzer


    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

  • Sebastian Vollmer


    (Ibero-Amerika Institut für Wirtschaftsforschung der Universität Göttingen)

Bilateral Free Trade Agreements (FTAs) and unilateral trade liberalization have been two strategies used extensively by Chile to expand its exports and improve its competitive position in the world markets. It is the objective of this paper to analyze the role of trade agreements, price competitiveness, real income, per capita income differences and transport costs in Chilean export trade with the EU. To this end, Chile’s most important export sectors, namely fish, fruit, beverages, ores, copper, and wood and products thereof are investigated using panel data from Chile’s main trading partners in the EU over the period 1988-2002. The econometric model used is a refined augmented gravity model. It is found that the FTA between Chile and the EU, if fish, fruit and wine were included, would have a noticeable impact on Chilean export performance. Price competitiveness is important in most of the sectors under investigation. As expected, the relevance and impact of transport costs on exports do vary from sector to sector.

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Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 125.

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Length: 31 pages
Date of creation: 08 Nov 2005
Date of revision:
Handle: RePEc:got:iaidps:125
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