Regional Trade Agreements for Mercosur: a comparison between the FTAA and the FTA with the European

ABSTRACT. This paper analyzes the impact on Mercosur of a free trade area in the Americas (FTAA) and a free trade area with the EU. The results show that trade liberalization generates substantial economic gains for Mercosur, although the FTAA option is slightly infe-rior to that of the FTA with the EU. Hemispheric integration stimulates export specialization in manufacturing industries relative to primary sector industries. Latin America greatly contri-butes to this result, since exports to this destination have a higher capital and technology content than exports to North America. The FTA with the EU expands agricultural exports. JEL Classification: C68; F13; F15