This paper presents general equilibrium evaluations of the MERCOSUL. T
hree scenarios are examined, varying from increased world regionalism
to an optimistic multilateral situation. Welfare gains are significant
for Uruguay, somewhat less for Argentina, and also present in Brazil.
Uruguay is less vulnerable to the world environment; Argentina, on th
e contrary, profits much from the union and multilateralism. MERCOSUL
exports rise for all sectors, and, under all scenarios, chemicals impo
rts increase; the EU and NAFTA are equally important trade partners. C
onsumers gain even in sectors with modest trade diversion, though the
number of firms decreases in all sectors but cars. Sensitivity analyse
s that raise results for Argentina depend on how Brazil engages in the
integration. They also point that a ''smaller Brazil'' leaves everyon
e worse off. Complementarity, either for Argentina and Brazil or for A
rgentina and Uruguay, seems the likely outcome of MERCOSUL. Though the
pattern of gains is clear for Uruguay, a deeper analysis is needed to
identify, for Argentina and Brazil, other key areas. (C) Society for
Policy Modeling, 1997