Andean Countries and USA: how much can beexpected from FTAs?

Using the GTAP CGE model/database this manuscript assesses the effects of simultaneous bilateral FTAs between Colombia, Ecuador and Peru and the United States of America. With 2004 data and a benchmark base scenario where tariffs are updated by the addition of information regarding trade agreements just signed by Latin American and the Caribbean (LAC) countries, three different policy intervention simulations are addressed: full liberalization,liberalization excluding sensible products, and no FTAs scenario with reversal of preferences given by the Andean Trade Promotion and Drug Eradication Act (ATPDEA). The global CGE model allows us to analyze direct and indirect socio-economics impacts on subscriber countries as well as on other countries in the region. The results suggest that the FTAs would be beneficial to improve terms of trade of all subscribers. Nevertheless, welfare implications are unevenly distributed in favor of United States and Peru. These FTAs also deviate trade from those Andean Countries not signing an agreement with U.S.A.; particularly, Bolivia and Venezuela recorded losses in terms of GDP and exports due to trade deviation and further competition within intraregional markets. Additionally, some countries in the region undergo erosions in their benefits from trade preferences with U.S.A., such as Chile and Mexico. The exclusion of sensible products in the agreements improves the outcomes for the signing Andean countries, giving us some insights for policy makers. On the other hand, the case of unsuccessful negotiations and ATPDEA expiration is the worst solution. In any case, active public policies to mitigate the potential negative effects, enhance positive impacts and seize dynamic opportunities towards sustainable development must be undertaken