Border Effects in the Atlantic Triangle

We investigate trade integration between members of the EU, NAFTA and Mercosur. The paper evaluates the ease of access to each of those markets from each other based on a benchmark consisting of trade within countries. This methodology, often labelled border effects, furnishes a new tool for the estimation of regional integration and market access in general. This is used here in particular to assess the access to Northern markets of Southern producers, a very sensitive question in the prospect of the new WTO round negotiations. We concentrate on the evaluation of access of certain Mercosur countries' exporters (Brazil, Argentina and Uruguay), to the EU and NAFTA markets. Building on those estimates, prospects can be made about possible future schemes of integration between Mercosur countries and the two large industrialized and integrated zones of this Atlantic Triangle. We evaluate in particular the possible trade effects of free trade agreements between Mercosur and the EU and Mercosur and NAFTA respectively. We explore then some possible explanations of border effects like tariffs, non-tariff barriers and bilateral FDI stocks, an important topic in the south of Latin America