Africa Region Working Paper Series No. 71

An Analysis of Chile's Trade Regime in 1998 and 2001:
A Good Practice Trade Policy Benchmark

Abstract

This note analyzes Chile's trade regime in 1998 and 2001, using the methodology developed by Hinkle et al. (2003) in "How Far Did Africa's First Generation Trade Reforms Go? An Intermediate Methodology for Comparative Analysis of Trade Policies." The methodology, through a quantitative assessment of the conventional border instruments of trade policy, leads to an estimate of the B index of anti-export bias originally proposed by Bhagwati (1978) and Krueger (1978). We find that Chile's trade regime is the most open among the countries analyzed to date with this methodology. While Chile was already the best performer in 1998, the unilateral trade liberalization undertaken by the government since then led to even lower anti-export bias in 2001.

Given its liberalization record, Chile provides a good practice policy benchmark for the analysis of trade regimes in other countries. All trade policy instruments seem to be in place to minimize the anti-export bias: low maximum and average tariffs; absence of foreign exchange restrictions, non-tariff barriers and export taxes; and timely VAT and import duty reimbursement schemes to give exporters' access to tariff and indirect-tax free inputs.

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