Abstract

PEREIRA VILLA, Catherine; GOMEZ ABELLA, Daniel  and  HERRERA, Luis Omar. THE COLOMBIA-CANADA FREE TRADE AREA: A PARTIAL EQUILIBRIUM SIMULATION. Semest. Econ. [online]. 2012, vol.15, n.31, pp.15-42. ISSN 0120-6346.

This paper uses disaggregated trade data for 2010 and applies ex-ante partial equilibrium modeling to calculate the impact of the preferential trade agreement between Canada and Colombia. The simulations carried out show aggregate trade creation could be one and a half times larger than trade diversion; trade between the two countries in the first year of the agreement could grow by approximately ten percent and will be focussed on a small number of goods; trade diversion is stronger with the largest trading partner of each signatory, namely the United States; and trade diversion is not strong in the case of Colombia' s neighbors with which there was significant trade prior to the agreement.

Keywords : Preferential trade agreement; trade creation; welfare effects; partial equilibrium simulation.

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