With the signature of the Asuncion Treaty by Argentina, Brazil, Paraguay and Uruguay in July 1991, the four countries implemented an ambitious program to reduce tariffs and non-tariff barriers on their reciprocal trade; a common policy toward third countries was implemented in 1995. As MERCOSUR...

The paper analyses the efficiency and the distributional effects of eliminating a tariff in a protected sector, in a Heckscher-Ohlin model of trade with costs of adjustment. The tariff can be eliminated at the onset or after a while. In case of postponing it the government may pre-announce the...