A highway across the Atlantic? Trade and welfare effects of the EU-Mercosur agreement

In this paper we analyze the EU-Mercosur agreement and predict its effects on trade welfare using a general equilibrium structural gravity model. First, exploit detailed provision-level information available for to identify partial of existing treaties with similar set provisions. second step, estimated increase in is mapped into reductions bilateral costs imputed country pairs compute terms creation, diversion, effects. Our results indicate that positive stemming from are likely be economically important, especially Mercosur countries, substantially heterogeneous both between within two blocs.