metadata: authors: 0: author: Erzan, Refik
1: author: Yeats, Alexander
count: Latin America,Caribbean,United States
docna: 0: docna: Free trade agreements with the United States
            : what's in it for Latin America?
docty: Policy Research Working Paper
subtopic: Oil Refining & Gas Industry,International Trade and Trade Rules,Free Trade,Trade Liberalization,Energy Demand,Energy and Environment,Energy and Mining
teratopic: International Economics and Trade
abstracts: cdata!: Unlike earlier analysts, who have
            focused on U.S. objectives, the authors focus here on what
            11 Latin American countries (Argentina, Bolivia, Brazil,
            Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay,
            and Venezuela) stand to gain from a preferential removal of
            U.S. trade barriers - that is, from the development of a
            free trade area (FTA) arrangement. They find that the United
            States is limited in its ability to extend significant FTA
            preferences to most Latin American countries because of the
            existing Generalized System of Preferences and the cuts in
            import duties negotiated in such previous multilateral trade
            negotiations as the Tokyo Round. They do not formally
            project the potential FTA-induced expansion of U.S. exports,
            but do make some detailed comparisons of the levels of
            tariff and nontariff protection in the U.S. and Latin
            American markets. Those comparisons suggest that the U.S.
            trade gains - particularly for highly protected transport
            and machinery products - are likely to be considerably
            greater than those for Latin America in the U.S. market.
            Their analysis also accents the potential dangers associated
            with independent negotiation of FTAs. Agreements that extend
            preferences to U.S. products below tariffs paid by other
            countries in the region would have a serious negative impact
            on trade among Latin American countries. Finally, the
            authors note that a successful conclusion of the Uruguay
            Round could greatly affect their projections.
geo_reg_key: 119228,517191
repnme: repnme: Free trade agreements with the United
            States : what's in it for Latin America?
display_title: Free trade agreements with the
            United States : what's in it for Latin America
listing_relative_url: /research/1992/01/699796/free-trade-agreements-united-states-whats-latin-america
topicv3: Energy and Extractives m1326595 507,Trade m1326924 698,Iron m1503514 2931,Free Trade Areas m1504279 2577,Petroleum Industry m1583790 4710
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: International Economics and Trade
origu: International Economics Department
no_of_pages: 74
model_extractions: <!-- Start of picture text -->
*-  : 1-.*,<br>Policy Research<br>Internatlonal Trade<br>WPS 827<br>This paper-- a product of  the  Intiernational Trade Division, International Economics Deparunent- is part ofa larger<br>effort in the Department to analyz.e and predict structural changes in trade and to identify Ifactors al'fecting developing<br>countries' exports. Copies of the paper are available f'ree from the World Bank, 1818 H SLreet NW, Washington DC<br>20433, Please contact Jean Jacobsoni, room S7-037,  cxtension  33710 (66 pages). January 1992.<br>Unlike earlier analysts, who have focuse(i on U.S.  have a heavv concentration of textile and clothing<br>objectives, Erz,.xi and Yeats focus here on what II  exports. Erzan an  i  Yeats estimate that the value of an<br>Latin American countries (Argentina, Bolivia, Brazil,  FTA in such a case might be reduced by as much as a<br>Chile, Colombia, Ecuador, Mexico, Par iguay, Peru,  half withoLt liberalization of nontariff barriers.<br>Uruguay, and  Venezuela)  siand to gain from a<br>preferential removal of' U.S. trade  harriers - ihat  is,  Still, even a preferential elimination of U.S.<br>f'rom the development ol a 1'rce trade area (FFA)  notarit' barriers would not induce a dramuatic short-<br>arrangement. (For lack of (lata, they do not address  run jump in trade, except in Brazil and Mexico. The<br>thc conse-uences of  aLn  FI'A among Latin America  maini incentive f'or the Latin American countries to<br>countries.)  form FTAs wilth the United States may be to attract<br>They  lfind  that the United Sutacs is limited in iLs  in%estimecnt (an issue this study does not address) or<br>ability to extend significanit  tTA  preferences to  Imiost  possibly' to halt the sprcad of' new trade restrictions.<br>Latin American countries because ol' the existing  This iginores the vrobably large long-term benefits to<br>Generalized Systenm of Pref'creinces and the cults in  he  gaine(l in  thc  export sector f'rom reduced trade<br>import duties negotiated in such previous miultilateral  harriers  among the lIatin American countries.<br>trade negouations as the Tokyo Round. In Brazil and  Erzzan and  Ycats  do not formally i;roject  the<br>Mexico, an ETA would liberalize important  lrade  potential  F-TA-induced  expansion of U.S. exports, but<br>barriers affecting their exports. But Erzan and Yeats  (1o make somtle detailed compari:ons of the levels of<br>e.stimate  that overall, full  FTA  preferences would  tariff and nontariff protection in the U.S. and Latin<br>raise Latin American export.; only 8 or 9 percent.  American markets. Those comparisons suggest that<br>Estimates made with a partial equilibrium trade  the U.S. trade gains  - particularly for highly<br>projection model suggest  ihat  a  U.S. FIl'A  vith/ Mcxico  protected transport and machinery products  - are<br>would greatl)y influence Mexico's trade with other  likely to be considerably greater thanl those for Latin<br>countries,  even if those countries also have an  FIA  America in the U.S. market. Their analysis also<br>with tUw  United  States.  An exclusive  FTA  between  accents the potential dangers associated with indepen-<br>Mexico and the United States would cause Mexico's  dent negotiation of  FTAs.  Agreements that extend<br>exports to increase about S1.6 billion annually and  prel'crences to  lU.S.  products below tariff's paid by<br>would displace about S'8 million in exports from  otier countries in the region would have a serious<br>other Latin Americani countries (and almost halfl a  negative impact on trade among Latin American<br>billion dollars of tra(le with countrics in the rest of the  countries.<br>world woul(i  he  diverted). Thie numibher and counLry  Finally, Er/an and Yeats tiote that a successful<br>compo.sition ol' FTAs the United  .States  negotiates  conclusion ol' the Lrugua) Round could greatly affect<br>wkith Latin America will greatly aiffect how  much  their proJections. If the Rounid results in sizable cuts<br>these agreenicrits are wkorth.  in MFN  atnd  applied t.triffs, the potential  FTA-<br>Poienitial  Lrade  gains fronil Latin Americani l-TAs  I(luce(l  cxpansion oif  Latin America.n exports would<br>i tI th1e I United States "Ill be considerably rc(iuce(i  be lower than their current estinmates. But any such<br>unless parallel action is takeni to remove or re(luce  multilaterally negotiated reductions would have the<br>lU.S. nonLariff barriers. NontarLit barriecs are palnicu-  general alfect of creating trade in this and otier<br>larl)  Important  fOr  countries such as U ruguay, w hich  region,.<br>Fhl  Ilohc  y  Rcwc,(lh Working  Pape'r  Serwes di'eminawte tli finding' o,  os  ork under s a! In the Bank. An objectic e of  the  scric"<br>I  to get  thcse findings  out quitklh,  csen  II  prtsentati  ns  are less Ilian lulik polished rhe Findings, interpretation'. an(i<br>conclusions in these  papers  (dto riot  neccssaril\ represLnt offli.tl  Banik  1)PIll.<br>Producc(d hK  the Polic\  Research Dissemination Cnlter<br><!-- End of picture text -->