This study aims to measure the effects of an agreement between Mercosur and the European Union (EU) on production, consumption and trade flows of rice, maize, soybeans and wheat in several regions. To estimate the effects of this agreement we used a spatial allo-cation model presented as a Mixed Complementarity Problem. As a result, we identify the variations in Producer's Surplus for the scenarios Mercosur-EU and Mercosur-extended EU, considering the elimination of tariff barriers and/or subsidies. In general, the highest gains for grain producers in the Mercosur countries happen in the Mercosur-EU scenario with the elimination of subsidies by the European countries. However, we emphasize that total gains for the Mercosur countries are positive, but the wheat sector shows significant losses in this scenario.
Mercosur; regional integration; grains
