The Global Trade Analysis Project (GTAP), a general equilibrium model, is applied to evaluate the effects that a hypothetical free trade agreement between the European Union (EU) and Latin America and the Caribbean would have on the economies of Brazil and the EU. Four scenarios are simulated taking different values for agricultural production subsidies and the common external tariff (CET). All scenarios impose the elimination of exports subsidies. The results indicate that a free trade agreement of the type envisioned by this paper would increase Brazilian economic growth, varying from 3.9% and 6.3%, and EU economic growth, between 0.3% and 1.8%. The benefits of trade liberalization would be concentrated in the economic sectors with the greatest comparative advantage - Brazilian agribusiness and EU manufactures - with trade creation.
