Regional integration, triangular trade and policy recommendations: the case of the Brazilian fine chemical industry

ABSTRACT This paper examines the occurrence of “triangular trade schemes” in the export of fine chemical products to Brazil from other Mercosur countries between 1989 and 1992 and suggests possible government counter measures. It is shown that the sudden increase in Brazilian imports of fine chemicals from Uruguay corresponds to a “triangular” trade scheme between both countries and a third party and suggests the adoption of more precise origin rules than those agreed during recent Mercosur negotiations, allowing the gains from integration to accrue mainly to the member countries.