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GTAP Resource #151

"NAFTA, MERCOSUR and Additive Regionalism in Chile: A Quantitative Evaluation"
by Tarr, David G.

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.

This paper is also available as the journal artcle
"Trade Policy Options for Chile: The Importance of Market Access" at

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: Dertment of Economics, College of Business Administration, University of South Carolina
Date: 1997
Created: Bacou, M. (9/27/2000)
Updated: Tarr, D. (8/28/2007)
Visits: 2,101
No keywords have been specified.

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