The objective of this paper is to evaluate the effects of a possible Free Trade Area between Mercosur and European Union (Mercoeuro) on economic growth, welfare and trade for the member countries. The theoretical basis is that of computable general equilibrium. The research problem is modeled through PAEG for Brazilian regions and Europe. The results point out to GDP growth, increased welfare as well as improvement in Brazilian trade. For the European Union, the results point out to GDP growth and welfare too, reduced exports of agricultural products and increased exports of manufactured goods.