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

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  • Harrison, Glenn W.
  • Rutherford, Thomas F.
  • Tarr, David G.

Abstract

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.

Suggested Citation

  • Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 2001. "Chile's regional arrangements and the Free Trade Agreement of the Americas : the importance of market access," Policy Research Working Paper Series 2634, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2634
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    References listed on IDEAS

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    1. Wooton, Ian, 1986. "Preferential trading agreements: An investigation," Journal of International Economics, Elsevier, vol. 21(1-2), pages 81-97, August.
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    3. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404, World Scientific Publishing Co. Pte. Ltd..
    4. Harrison, Glenn W. & Rutherford, Thomas F. & Tarr, David G., 1997. "Trade policy options for Chile : a quantitative evaluation," Policy Research Working Paper Series 1783, The World Bank.
    5. Alberto Valdés, 1995. "Joining an Existing Regional Trade Agreement from the Perspective of a Small Open Economy: Chile's Accession to NAFTA and MERCOSUR," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(5), pages 1292-1297.
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    8. Juan Eduardo Coeymans & Felipe Larraín, 1994. "Efectos de un Acuerdo de Libre Comercio entre Chile y Estados Unidos: Un Enfoque de Equilibrio General," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 31(94), pages 357-400.
    9. Bond,Eric W., 1997. "Using tariff indices to evaluate preferential trading arrangements : an application to Chile," Policy Research Working Paper Series 1751, The World Bank.
    10. Glenn W. Harrison & Thomas F. Rutherford & Ian Wooton, 1993. "An Alternative Welfare Decomposition for Customs Unions," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 961-968, November.
    11. Reinert, Kenneth A. & Roland-Holst, David W., 1992. "Armington elasticities for United States manufacturing sectors," Journal of Policy Modeling, Elsevier, vol. 14(5), pages 631-639, October.
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    Citations

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    Cited by:

    1. Rutherford, Thomas & Tarr, David, 2008. "Regional household and poverty effects of Russia's accession to the world trade organization," Policy Research Working Paper Series 4570, The World Bank.
    2. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2017. "Rules Of Thumb For Evaluating Preferential Trading Arrangements: Evidence From Cge Assessments," World Scientific Book Chapters, in: Trade Policies for Development and Transition, chapter 7, pages 145-153, World Scientific Publishing Co. Pte. Ltd..
    3. Glenn W. Harrison & Thomas F. Rutherford & Tarr,David, 2003. "Rules of thumb for evaluating preferential trading arrangements : evidence from computable general equilibrium assessments," Policy Research Working Paper Series 3149, The World Bank.
    4. Romulo Chumacero & Rodrigo Fuentes, 2004. "Chile's Free Trade Deals with the EU and the US: A Big Deal?," Econometric Society 2004 Far Eastern Meetings 661, Econometric Society.
    5. Antônio Carvalho Campos & Angelo Costa Gurgel, 2004. "Avaliação De Políticas Comerciais Em Modelos De Equilíbrio Geral Com Pressuposições Alternativas Quanto Aos Retornos À Escala," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 106, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. McDaniel, Christine A. & Balistreri, Edward J., 2002. "A Discussion on Armington Trade Substitution Elasticities," Working Papers 15856, United States International Trade Commission, Office of Economics.
    7. Silvia Laens & Inés Terra, 2003. "Integration of the Americas: Welfare Effects and Options for the MERCOSUR," Documentos de Trabajo (working papers) 0903, Department of Economics - dECON.

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