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Trade preferential agreements in Latin America : an ex-ante assessment

Author

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  • Michaely, Michael

Abstract

In the past decade a sea change has taken place in trade policies in Latin America: within a few years, most of the region's economies have changed from restrictive to open policies. But unlike trade liberalization in Europe, most trade barriers in Latin America have been reduced unilaterally. Recently bilateral or multilateral agreements have been considered, especially preferential tradeagreements within the region. The author evaluates the relevance and desirability of multilateral free trade agreements (such as NAFTA) for the Latin American continent and the Caribbean, with an emphasis on how they affect trade flows. Is a preferential trade agreement among some Latin American countries more or less likely to be meaningful than others - important in intensity of impact, or beneficial, or both? The evidence strongly suggests little likelihood that these agreements will succeed in Latin America. Paradoxically, the intense liberalization in recent years has made it less likely that such agreements would be beneficial - except possibly for agreements between some countries and Brazil, Mexico, or (to a lesser extent) Argentina. When the level of tariffs and nontariff barriers is already low, a preferential agreement is more likely to have an adverse impact than a beneficial one (although in any case only a slight impact). Between countries, the patterns of exports and imports are similar, suggesting a potential for trade diversion. Most countries would benefit from a preferential agreement with the United States, however. And U.S. agreements with blocks of Latin American countries are no more beneficial to those countries than are U.S. agreements with individual countries.

Suggested Citation

  • Michaely, Michael, 1996. "Trade preferential agreements in Latin America : an ex-ante assessment," Policy Research Working Paper Series 1583, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1583
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    Citations

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    Cited by:

    1. Lord, Montague, 2015. "Regional Economic Integration in Central Asia and South Asia," MPRA Paper 66436, University Library of Munich, Germany.
    2. Hans Weisfeld & Manuela Goretti, 2008. "Trade in the WAEMU; Developments and Reform Opportunities," IMF Working Papers 08/68, International Monetary Fund.
    3. Vaqar Ahmed & Samavia Batool, 2017. "India-Pakistan Trade: Perspectives from the Automobile Sector in Pakistan," Working Papers id:12263, eSocialSciences.
    4. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    5. Terra, María Inés, 1998. "Uruguay en el MERCOSUR: perspectivas del comercio intrarregional," Oficina de la CEPAL en Montevideo (Estudios e Investigaciones) 28649, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Cadot, Olivier & de Melo, Jaime & Olarreaga, Marcelo, 1999. "Asymmetric Regionalism in Sub-Saharan Africa: Where Do We Stand?," CEPR Discussion Papers 2299, C.E.P.R. Discussion Papers.
    7. repec:wfo:wstudy:58723 is not listed on IDEAS
    8. World Bank, 2006. "Is There a New Vision for Maghreb Economic Integation? Volume 2. Annex," World Bank Other Operational Studies 19624, The World Bank.
    9. Khadan, Jeetendra & Hosein, Roger, 2014. "Trade, Economic and Welfare impacts of the CARICOM-Canada Free Trade Agreement," MPRA Paper 54836, University Library of Munich, Germany.
    10. repec:zbw:espost:163428 is not listed on IDEAS

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