Abstract: | This article uses a multisector, multicountry, computable generalequilibrium model to examine Chile's strategy of "additive regionalism"negotiatingbilateral free trade agreements with all of its significanttrading partners. Taking Chile's regional arrangements bilaterally,only its agreements with Northern partners provide sufficientmarket access to overcome trade diversion costs. Due to preferentialmarket access, however, additive regionalism is likely to provideChile with gains that are many multiples of the static welfaregains from unilateral free trade. At least one partner countryloses from each of the regional agreements considered, and excludedcountries as a group always lose. Gains to the world from globalfree trade are estimated to be vastly larger than gains fromany of the regional arrangements. |