Trade Policy Options for Chile: The Importance of Market Access

Glenn Harrison, Thomas Rutherford () and David Tarr

The World Bank Economic Review, 2002, vol. 16, issue 1, 49-79

Abstract: This article uses a multisector, multicountry, computable general equilibrium model to examine Chile's strategy of "additive regionalism"--negotiating bilateral free trade agreements with all of its significant trading partners. Taking Chile's regional arrangements bilaterally, only its agreements with Northern partners provide sufficient market access to overcome trade diversion costs. Due to preferential market access, however, additive regionalism is likely to provide Chile with gains that are many multiples of the static welfare gains from unilateral free trade. At least one partner country loses from each of the regional agreements considered, and excluded countries as a group always lose. Gains to the world from global free trade are estimated to be vastly larger than gains from any of the regional arrangements. Copyright 2002, Oxford University Press.

Date: 2002
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