Trade Policy Options for Chile: The Importance of Market Access

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.

Comparison of deep integration in the Melitz, Krugman and Armington models: The case of The Philippines in RCEP

“…They estimated substantial welfare gains to the partner countries of the EU from deep integration, but acknowledge their estimates are upward biased since they are based on a comparative steady-state model. Harrison, Rutherford and Tarr (2002) estimated that Chile would lose from individual preferential arrangements with Southern neighbors unless it lowered its 11 percent uniform tariff in place at the time. However, due to substantial estimated terms-of-trade gains to Chile in partner markets, the collective impact of its "additive regionalism" or "competitive regionalism" strategy produced estimated welfare gains many multiples of unilateral tariff liberalization.…”

Evaluando Reformas Tributarias en Chile Con Un Modelo Cge

“…Aunque estos resultados pudieron ser obtenidos mediante un modelo estilizado, a través de su modelación pudieron cuantificar desagregadamente las ganancias de tal cambio impositivo; Mun-Heng y Quian (2005) evalúan la reforma impositiva de 1994 en China, detectando a través de simulaciones que se obtuvieron ganancias en el bienestar pequeñas y sugiriendo extender el IVA a otros sectores actualmente no incluidos en la reforma; Gooroochurn y Milner (2005) usan un modelo CGE para examinar el impacto de cargar impuestos al turismo en la economía de Mauricio; Field (2007) analiza los efectos de la política industrial en Tailandia bajo diferentes opciones de impuestos; Radulescu y Stimmelmayr (2010) desarrollan un modelo CGE dinámico para analizar los impactos de la reforma al impuesto corporativo de 2008 en Alemania. En Chile existen algunas aplicaciones que han abordado el cambio de impuestos con CGE, pero no desde la perspectiva de una reforma tributaria, sino más bien para evaluar impactos económicos y ambientales de un aumento en el impuesto a los combustibles como en O' Ryan et al (2003Ryan et al ( y 2005, y la política comercial como en Harrison et al (2002).…”

Chile: Institutions and Policies Underpinning Stability and Growth

“…The cost of trade diversion depends on the level of overall protection and the advantages that RIAs' partners are given. For instance, RIAs with small, developing countries are likely to reduce welfare (as shown for the agreement with Mercosur by Harrison, Rutherford, and Tarr (2002)) as they tend to be based on political considerations. On the other hand, developing countries have limited bargaining power in their negotiations of RIAs with the United States and the EU.…”

“…45 The unilateral trade liberalization strategy implicitly assumes that the tariff and nontariff barriers facing the exports of a country are very low or nonexistent (Wonnacott and Wonnacott, 1981). 46 Harrison, Rutherford, and Tarr (2002) show that the strategy of combining free trade agreements with Canada, Mexico, the United States, the EU, Mercosur, and the rest of South America produces welfare gains for Chile that are many multiples of the value of unilateral free trade if it were to attain tariff-free access to all these markets. 47 Campero and Escobar (1992), Zechner (2002), and Schiff (2002).…”