Trade Policy Dialogue on the Multiple
Dimensions of Market Access and Development
Session IV
Regional Trade Liberalizations as a
Complement of Multilateral
Liberalization?
Mario Matus
Ambassador of Chile to WTO
México, October 24, 2006
1
Presentation
 Why FTAs/RTAs?
 Chilean experience
 Looking for complementary to WTO?
2
FTAs/RTAs

Scope for Regional Trade Arrangements:
 Limited
 Comprehensive

Problems
 Exception
to MFN
 Discrimination. Exclusion of other members.
 Trade deviation
 Complexity for business community
 Different level of negotiating leverage
 Do not address all issues (i.e. DS, Export Subs)
 Erosion of multilateral system if they do not go
beyond & under WTO rules & principles
3
Why FTAs/RTAs



Market access (goods)
Easier to negotiate (bilateral fine tuning)
Political reasons:






International (i.e. US-Chile; US-Jordan, etc)
Domestic (i.e. push for internal changes)
To be paid for liberalization
Not to be kept behind
To minimize trade deviation (further negotiations)
WTO slowness for honest free traders



Real free trade (0% tariff)
Develop more and stricter rules (i.e. TR, Compt, etc)
Protection of foreign investment
4
Chilean reasons

Foreign trade policy
 Open
economy (free flows goods, S & I)
 Dependent on international trade (more trade)
 Small country (disciplines)
 Transparent/legalistic/non corrupted (disciplines)





Certainty. Rules and disciplines
Dispute settlement
Reduce external economic vulnerability
Attraction of FDI
Differentiation in international economic context
5
What do we are looking for?

Commercial
 Trade
creation & reduction of trade diversion
 Elimination tariff peaks
 Promote exports
 Induce more competition

Economic
 Rules
and disciplines
 Reduce external economic vulnerability
 Attract FDI

Political
 Dispute
settlement
 Differentiation in context of international
economic turbulence
6
Chile's bilateralism
Comprehensive FTAs
Limited Trade Agreements:

Canada
Mexico
Central America (5)
European Union (25)
USA
South Korea
EFTA (4)
Singapore
New Zealand
Brunei
China
Panama
1997
1999
2002
2003
2004
2004
2004
2005
2005
2005
2005
2006

Japan
2006


Mexico
1991

Venezuela
1993

Colombia
1994

Ecuador
1995

Mercosur (4)
1996









Peru
1998

India
2005
54 +


7
Chilean Trade I
90
80
% of growth
70
60
W Agreements
50
40
W/O Agreements
30
20
Total trade
10
0
94
95
96
97
98
99
Year
0
1
2
3
4
8
Chilean Trade II
250
200
% of growth
150
Mexico
Canada
100
US
UE
Korea
50
0
1994
1995
1996
1997
1998
1999
Ye ar
2000
2001
2002
2003
2004
9
Chile : Merchandise Exports
40,6
40
Billion dollars
35
32,0
30
US$
25
20
16,0 15,4
15
10
5
4,2 5,2
7,0
10,0 9,2
8,1 8,4 8,9
17,9
16,3 17,2
19,2 18,3 18,2
21,5
11,6
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Years
Source : Central Bank of Chile
10
Gross Domestic Product
(1984 = 100)
400
350
331
300
250
218
200
150
174
125
109 117
104
100
138 143
186
234
250
258 256
282
267 276
293
311
197
155
100
50
0
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source : Central Bank of Chile
Annual average GDP growth rate 84-05: 5.9 %
11
Growth, trade and poverty
(1990-2000)
40 000
40
36 000
38
32 000
36
28 000
34
24 000
32
20 000
30
16 000
28
12 000
26
8 000
24
4 000
22
0
% de la población total
miles de millones de Ch$ de 1996
Evolución del Producto, Intercambio Comercial y Pobreza
20
1990
1992
1994
Intercambio (X+M)
1996
años
GDP
1998
2000
# of poors
12
Comprehensiveness


Goods

Institutional

Tariffs (no exceptions)
 Transparency

NTM (prohibition)
 Objectives,

Customs (proced & standards)

Rules of origin (simple)
exceptions, final
provisions, etc.
 DSM
Disciplines

Safeguards (Bilat-Global)

TBT/SPS

Competition / AD

“Non trade issues”
 Intellectual
Property Rights
 Labor

Services (negative list)

Investment (pre-post)
 Cooperation

Temporary entry
 Political
 Environment
commitments
13
Bilateralism vs Multilateralism


Comprehensiveness

All topics includes

GATT Art. XXIV

GATS Art V

Enabling clause

Minimum exceptions in MA (goods & services)
Future work

Common rules of origin

Precision on Arts. XXIV & V

Common definition of “going beyond WTO”

Best practices in APEC, OECD?

Develop model for FTAs/RTAs?
14
Spaghetti bowl
15