mediately eliminated 75 percent of bilateral tariffs, with most of the remaining tariffs being
gradually phased out. The agreement largely follows the NAFTA, in that - besides bilateral
trade liberalization - it also contains parallel provisions on investment protection, a mutual
exemption from anti-dumping measures and on labor and environmental standards. An anal-
ysis of the CCFTA is useful for insights beyond the CCFTA. Canada has recently signed two
other FTA’s (with Colombia and Peru) modeled on the NAFTA. Analyzing the CCFTA will
help us understand the impacts of FTA’s with Colombia and Peru as well.5
We focus on the agricultural trade impacts of the CCFTA. The CCFTA also provides
the immediate or gradual elimination of tariffs for most products in the agricultural sector.
It immediately eliminated 69 percent of tariffs set by Canada and 44 percent of tariffs set
by Chile, and for most other products tariffs were to be phased out gradually.6 We focus
on agriculture as this sector is often a sticking point in most trade agreements. This is
borne out by the observation that most FTAs around the world contain special provisions
for agriculture. Sometimes segments of the agriculture sector are entirely excluded from
trade liberalization. Consider the US-Australia FTA as an example. This FTA requires no
change in the U.S. MFN above-quota tariff on dairy products, and also requires no change
in Australia’s quota access for sugar. Similarly, the CCFTA also allows both countries to
maintain the application of tariffs for quantities exceeding respective quotas for diary, poultry
and egg products.
To study the agricultural trade impact of this FTA, we use a gravity model to predict
5 This analysis will probably provide the best predicton of the agricultural impacts of these agreements
for the next few years before the data required to anlalyze these FTA’s becomes available.
6 35 percent of Canadian HS6 categories are exempt from tariff reductions and 22 percent
of Chilean. This information is gathered from the Agriculture and Agrifood Canada web site:
http://www.agr.gc.ca/misb/itpd/english/trade_agr/ccfta.htm.