A general equilibrium, ex-post evaluation of the EU–Chile Free Trade Agreement

This paper evaluates the impact on the Chilean economy of the EU–Chile Free Trade Agreement, in force since 2003, based on a computable general equilibrium (CGE) model. The evaluation method, inspired by structural decomposition methods, consists of double calibration of the model, to account for interactions between the agreement's impact and structural change in the Chilean economy. Trade flows are modeled at the detailed product level (six-digit level classification). The agreement is found to be slightly beneficial to Chile's economy on the whole, benefiting mainly unskilled labor, with gains concentrated in few sectors (fruits, wine, fisheries and seafood processing). •A double model calibration is used to assess FTA impact given structural change.•Chile–EU trade and protection is modeled at the product level.•The FTA is assessed to trigger an aggregate gain for Chile (0.2% of real income).•Main winning sectors are identified in Chile and the EU.•In Chile, 30 products account for 80% of the bilateral export creation.