Trade Policy Dialogue on the Multiple Dimensions of Market Access and Development

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 • 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

4. 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

5. 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

6. 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

7. Chile's bilateralism Limited Trade Agreements: • Mexico 1991 • Venezuela 1993 • Colombia 1994 • Ecuador 1995 • Mercosur (4) 1996 • Peru 1998 • India 2005 Comprehensive FTAs • Canada 1997 • Mexico 1999 • Central America (5) 2002 • European Union (25) 2003 • USA 2004 • South Korea 2004 • EFTA (4)2004 • Singapore 2005 • New Zealand 2005 • Brunei 2005 • China 2005 • Panama 2006 • Japan2006 54 +

8. Chilean Trade I

9. Chilean Trade II

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

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

12. Growth, trade and poverty (1990-2000) Evolución del Producto, Intercambio Comercial y Pobreza 40 000 40 36 000 38 32 000 36 28 000 34 24 000 32 miles de millones de Ch$ de 1996 20 000 30 % de la población total 16 000 28 12 000 26 8 000 24 4 000 22 0 20 1990 1992 1994 1996 1998 2000 GDP # of poors años Intercambio (X+M)

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

14. 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?

15. Spaghetti bowl