Presentacin de PowerPoint

1
Putting Ideas into Action Chile, the case of Free
Trade
Cristián Larroulet
April 2004
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Putting Ideas into Action Chile, the case of Free
Trade

• LyDs Goal Promotion of Free Trade
• In 1991 when the mayority of the country thought
  that a 15 tariff was reasonable, we proposed the
  idea to reduce it to a general level of 5
  (Chart)
• Bilateral Agreement could be dangerous for free
  trade, but they are also an instrument (Chart)
• Free Trade is also free capital movements.
  Developing countries need foreign investment
  (Chart)
• Examples of succes are the best argument in favor
  of Free Trade (Chart)
• Free Trade in Latin American How far? (Chart)

3
Towards Free Trade Unilaterally Chilean Legal
Taxes on Trade (1974-2003)
100
90
80
70
60
50
40
30
20
10
0
2003
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
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Putting Ideas into Action Chile, the case of Free
Trade

• In 1993, the government proposed a Free Trade
  Agreement between Chile and Mercosur.
• We submitted a report to the Senate stating
• We recomended an agreement with Mercosur only if
  the country reduced the tariff to a uniform level
  of 5.
• We recomended more bilateral agreements with our
  natural partners USA, EU.

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Towards Free Trade Bilateral Agreements Chilean
Trade Agreements ( of Imports 2002)
Approved
Next
Mexico (3,0) Canada (2,0) Mercosur
(30,6) Bolivia (0,1) Colombia (1,3) Ecuador
(0,6) Peru (1,6) Venezuela (1,0) UE
(19,2) United States (16,3) Korea (2,8 )
India (0,5 ) China (6,8 ) Japan (3,2 )
N. Zealand (0,1 ) Singapore (0,1 )
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Chilean Foreign Investment (Mills US
Accumulated)
7
Free Trade The results of Chile
At the 70s
Today
13
Exports /GDP
29
1.247
ExportS (US Mills)
20.828
208
Nº of Companies
5.666
412
Nº of Product
3.749
60
Nº of Countries
166
83
Cooper /Total Exports
35
8
Trade and Growth
Trade/GDP
GDP
9
Long Term Effects of FTA Chile-United States
(Real variation with respect to situation
without agreement)
agriculture
mining
Industry
Fishing
Services
Total
Exports Volume
Towards US
21,9
12,6
27,3
10,0
8,7
18,2
Towards the rest of the World
10,9
11,8
10,8
9,3
8,8
10,7
14,3
11,9
17,6
9,4
8,8
12,3
Total
GDP
10,8
12,3
12,9
9,6
9,6
10,0
Capital
16,3
14,9
18,7
14,8
15,7
16,0
Real wages
11,4
-50 p.b
Risk Country
Source Coeymans y Larraín
10
Free Trade How far? Tax on Trade
80s
2003
MAX
MIN
Average
0 0 0 0 0 0 0 0
Argentina Bolivia Brazil Chile Colombia Mexico Per
u Venezuela
55 20 105 20 200 100 120 135
9,2 9,0 11,1 2,8 11,0 1,7 12,6 13,5
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Free Trade How far? Political Indicators
Political Institutions
Corruption
Argentina
Free
High Corruption
Mainly Free
Brazil
High Corruption
Chile
Free
Low Corruption
Colombia
High Corruption
Mainly Free
Ecuador
High Corruption
Mainly Free
Mexico
High Corruption
Mainly Free
Peru
High Corruption
Mainly Free
Venezuela
High Corruption
Mainly Free
Source Heritage Foundation, USA. CEP, Chile
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Criteria for Membership in FTAA
Trade
Investment
Regulation
Property Rights
Total
USA
2
2
2
1
7
Chile
2
2
3
1
8
El Salvador
2
2
2
3
9
Uruguay
2
2
3
2
9
Costa Rica
3
2
3
3
11
Mexico
2
3
3
3
11
Colombia
4
2
3
4
13
Brazil
4
3
3
3
13
Argentina
4
3
3
4
14
Peru
4
2
4
4
14
Source Heritage Foundation.