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Effects of EU-Mercosur trade agreement on bilateral trade: the role of Brexit

Sanguinet, Eduardo and Alvim, Augusto (2020): Effects of EU-Mercosur trade agreement on bilateral trade: the role of Brexit.

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Abstract

This article aims to assess the impact of the EU-Mercosur Agreement on the Brazilian economy using the Computable General Model (CGE) Global Trade Analysis Project (GTAP). The study proposes two sets of simulations – one with the United Kingdom as a member of the EU and the other without being a member, according to Brexit context. There is evidence of positive effects on foreign trade and on the welfare level in Brazil, with emphasis on manufactured goods and the grains of crops. The EU consolidates its presence in global trade. The results show that Mercosur benefits Brazilian foreign trade, making it a strategic partner at the regional level. It is concluded that Brexit can reduce Brazilian gains in the EU-Mercosur agreement, being important the discussion about the creation of another agreement involving the United Kingdom.

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