1 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

2 Presentation   Why FTAs/RTAs?   Chilean experience   Looking for complementary to WTO?

3 FTAs/RTAs n Scope for Regional Trade Arrangements: u Limited u Comprehensive n Problems u Exception to MFN u Discrimination. Exclusion of other members. u Trade deviation u Complexity for business community u Different level of negotiating leverage u Do not address all issues (i.e. DS, Export Subs) u Erosion of multilateral system if they do not go beyond & under WTO rules & principles

4 Why FTAs/RTAs n Market access (goods) n Easier to negotiate (bilateral fine tuning) n Political reasons: u International (i.e. US-Chile; US-Jordan, etc) u Domestic (i.e. push for internal changes) n To be paid for liberalization n Not to be kept behind n To minimize trade deviation (further negotiations) n WTO slowness for honest free traders u Real free trade (0% tariff) u Develop more and stricter rules (i.e. TR, Compt, etc) u Protection of foreign investment

5 Chilean reasons n Foreign trade policy u Open economy (free flows goods, S & I) u Dependent on international trade (more trade) u Small country (disciplines) u Transparent/legalistic/non corrupted (disciplines) n Certainty. Rules and disciplines n Dispute settlement n Reduce external economic vulnerability n Attraction of FDI n Differentiation in international economic context

6 What do we are looking for? n Commercial u Trade creation & reduction of trade diversion u Elimination tariff peaks u Promote exports u Induce more competition n Economic u Rules and disciplines u Reduce external economic vulnerability u Attract FDI n Political u Dispute settlement u Differentiation in context of international economic turbulence

7 Chile's bilateralism Comprehensive FTAs Comprehensive FTAs   Canada 1997   Mexico 1999   Central America (5)2002   European Union (25)2003   USA 2004   South Korea 2004   EFTA (4)2004   Singapore2005   New Zealand2005   Brunei2005   China 2005   Panama2006  2006  Japan 2006 Limited Trade Agreements:  Mexico1991  Venezuela1993  Colombia1994  Ecuador1995  Mercosur (4)1996  Peru1998 F India

8 Chilean Trade I

9 Chilean Trade II

10 Chile : Merchandise Exports Source : Central Bank of Chile Billion dollars

11 Gross Domestic Product Source : Central Bank of Chile Annual average GDP growth rate 84-05: 5.9 % (1984 = 100)

12 Growth, trade and poverty ( ) Evolución del Producto, Intercambio Comercial y Pobreza años miles de millones de Ch$ de % de la población total Intercambio (X+M) GDP # of poors

13 n Institutional u Transparency u Objectives, exceptions, final provisions, etc. u DSM “Non trade issues” “Non trade issues” u Intellectual Property Rights u Labor u Environment u Cooperation u Political commitments Comprehensiveness n Goods u Tariffs (no exceptions) u NTM (prohibition) u Customs (proced & standards) u Rules of origin (simple) n Disciplines u Safeguards (Bilat-Global) u TBT/SPS u Competition / AD Services (negative list) Services (negative list) n Investment (pre-post) n Temporary entry

14 Bilateralism vs Multilateralism n Comprehensiveness u All topics includes u GATT Art. XXIV u GATS Art V u Enabling clause u Minimum exceptions in MA (goods & services) n Future work u Common rules of origin u Precision on Arts. XXIV & V u Common definition of “going beyond WTO” u Best practices in APEC, OECD? u Develop model for FTAs/RTAs?

15 Spaghetti bowl