Analyzing the Agricultural Trade Impacts of the Canada-Chile Free Trade Agreement

Abstract

In this paper we study the agricultural trade impacts of the Canada Chile Free Trade Agreement
(CCFTA). We find that the effect of the CCFTA on Chilean agricultural exports to Canada is
large and positive. We estimate that approximately one-half of a 90 percent increase in Chilean
exports to Canada can be attributed to trade preferences that the country received under the
agreement. We found no effect of the agreement on Canadian exports to Chile. As far as we
know, our paper is among the few that carries out a detailed empirical analysis of \ the effect of
the FTA on agriculture. Most empirical papers that have studied the trade impact of FTAs rely
on country-wide gravity models and aggregate trade data. These aggregate analyses can hide
negative effects of FTAs on some sectors (like agriculture) where a country may have a
comparative disadvantage. Our approach is industry-focused and differs from the mainstream
literature analyzing FTAs.

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