Trade Liberalization in Latin American Countries and the Agreement on Textiles and Clothing in the Wto

The Agreement on Textiles and Clothing (ATC) at the WTO deals with the progressive opening of the markets in high-income countries, favoring the dynamic exporters among the developing countries. This process is to be finished by the year 2005, when the whole sector is going to be under the WTO rules, and will occur in four steps, but only at the end will the majority of products be included. In fact, the scope of the liberalization, implemented up to now, has been limited because the countries have committed in nonrestricted products, with small value added or with high tariff protection, adopting temporary safeguards, antidumping measures or other restrictions. During the same period the Latin American countries have liberalized their economies, which has been followed by a significant increase in their imports. This paper aims to disentangle the effect on Latin America of the delay in the opening of the big importer markets. Specifically, it questions to what extent the increase in Latin American imports has exposed the local producers to increased competition from foreign products than would be the case if the liberalization had been carried out at the same time by both sides. A General Equilibrium Multi-country Trade Model (GTAP) is used to simulate the effects of the elimination of trade barriers on Latin American countries in relevant scenarios.