Texto para Discussão, Instituto de Pesquisa Econômica Aplicada (IPEA) 1789
This article evaluates the main effects for the Brazilian economy from the creation of a free trade zone among the BRICS economies. A welfare analysis suggests the Chinese economy to be the closest - in comparison to the remaining BRICS - to the definition of a natural trade partner for Brazil. Furthermore, despite the current low levels of bilateral trade flows among the BRICS economies - China excluded - the nullification of intra block import tariffs may significantly increase trade relations among these economies. For instance, resulting welfare levels are comparable in magnitude to the ones obtained in a hypothetical bilateral free trade agreement involving Brazil and the USA. This result, however, is strongly influenced by the presence of China, signaling the increasing proximity of the Chinese trade pattern to the ones usually observed in more developed economies, such as the USA.
free trade computable general equilibrium trade creation and diversion social welfare