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Winners and Losers in a Free Trade Area between The United States and MERCOSUR

Author

Listed:
  • Marcel Vaillant

    (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Alvaro Ons

    (Departmento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

This document considers an eventual Free Trade Area between the US and MERCOSUR with the objective of constructing two lists of products (HS 6 digits), one expansive (trade opportunities) and one defensive (trade perils), for each of the participants in the agreement. The theoretical model of reference is the Grossman and Helpman model of the politics of Free Trade Agreements. An original methodology for the opportunities and perils determination based on trade specialisation indexes and trade policy data has been developed. The economic size asymmetries have been introduced into the analysis through an empirical implementation of the regimes of protection typology provided by the theory (enhanced and reduced protection). The main conclusions are: i) agricultural producers in the US face a peril while agricultural producers in MERCOSUR could have opportunities (improvement in international prices); ii) there are no evident opportunities for US producers in the MERCOSUR (reduced size of the market) while producers of manufactures in the MERCOSUR face an evident peril in the regional market; and iii) MERCOSUR opportunities are concentrated in lighter manufactures.

Suggested Citation

  • Marcel Vaillant & Alvaro Ons, 2003. "Winners and Losers in a Free Trade Area between The United States and MERCOSUR," Documentos de Trabajo (working papers) 1403, Department of Economics - dECON.
  • Handle: RePEc:ude:wpaper:1403
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    File URL: http://decon.edu.uy/publica/2003/Doc1403.pdf
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    References listed on IDEAS

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    1. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
    2. Marcel Vaillant & Alvaro Ons, 2002. "Preferential Trading Arrangements Between the European Union and South America: The Political Economy of Free Trade Zones in Practice," The World Economy, Wiley Blackwell, vol. 25(10), pages 1433-1468, November.
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    Cited by:

    1. Alexander Schejtman & Julio A. Berdegué, 2006. "El Impacto Social de la Integración Regional en América Latina Rural," IDB Publications (Working Papers) 9125, Inter-American Development Bank.
    2. Honório Kume & Guida Piani, 2004. "ALCA: Uma Estimativa do Impacto no Comércio Bilateral Brasil-Estados Unidos," Discussion Papers 1058, Instituto de Pesquisa Econômica Aplicada - IPEA.
    3. Silvia Laens & Inés Terra, 2003. "Integration of the Americas: Welfare Effects and Options for the MERCOSUR," Documentos de Trabajo (working papers) 0903, Department of Economics - dECON.
    4. Honório Kume & Guida Piani & Pedro Miranda, 2005. "Índia-Mercosul: Perspectivas de um Acordo de Preferências Comerciais," Discussion Papers 1120, Instituto de Pesquisa Econômica Aplicada - IPEA.
    5. Alexander Schejtman & Julio A. Berdegué, 2006. "El Impacto Social de la Integración Regional en América Latina Rural," IDB Publications (Working Papers) 2327, Inter-American Development Bank.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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