Brazil together with 21 other developing countries signed this Wednesday, December 2, in Geneva, an agreement for reducing import tariffs among themselves. The negotiation, named the São Paulo Round, takes place within the Global System of Trade Preferences Among Developing Countries (GSTP). Arab countries Algeria, Egypt and Morocco are included.
Other countries involved are Argentina, Paraguay, Uruguay, Chile, Cuba, India, Iran, Indonesia, Malaysia, Mexico, Nigeria, Pakistan, South Korea and North Korea, Sri Lanka, Thailand, Vietnam and Zimbabwe.
The agreement postulates that trade tariffs within the group are going to be reduced by at least 20%. The reduction will apply to at least 70% of the products traded. The next step in making the agreement effective, according to information disclosed by the Brazilian foreign office (Itamaraty), will consist of each country submitting a list of products, by May next year.
From May to September, the nations involved are going to engage in bilateral negotiations. The final lists of commitments will be submitted by September and the treaty becomes effective as soon as all of the parties have signed it.
Even though it was announced in Geneva, due to the lack of an understanding at the Doha Round for liberalization of trade among developing and developed countries, the São Paulo Round was launched in 2004, during a meeting of the United Nations Conference on Trade and Development (Unctad) in the capital of São Paulo.
According to data from the Itamaraty, the countries in the current agreement account for 13% of the world’s Gross Domestic Product (GDP), US$ 8 trillion, and 15% of international trade, which totals around US$ 5 trillion.
"The South- South agreement launched today will create new market access opportunities for a wide range of products exported from countries in Africa, Asia and Latin America," says the Brazilian Ministry of Foreign Relations, in a press release.
According to the text, after the agreement has been signed, every two years, the participants will seek to expand it. "The Brazilian government is convinced that the agreement is an unprecedented step forward in South-South cooperation. The agreement will inspire similar and complementary initiatives that will contribute to boost economic and social wealth in developing countries," according to the release.
Brazil already has an active trade basket with the three Arab countries involved and should benefit from the tariff reduction. The country exported the equivalent of US$ 563 million to Algeria from January to October this year, consisting mainly of sugar, meats and soy oil. Brazilian imports from Algeria totaled US$ 1.19 billion, consisting basically of oil and naphtha.
Exports from Brazil to Egypt totaled US$ 1.1 billion, in items such as ores, meats and sugar, and imports totaled US$ 75 million, mainly in urea. Morocco sold to Brazil the equivalent of US$ 312 million, mainly in phosphates, and bought US$ 440 million in sugar, soy and maize, among others.
The GSTP was established in 1989 and provides for preferential concessions and cooperation in order to foster trade among developing countries. It complies with a clause in the World Trade Organization regulations that allows for lower tariffs to be adopted in order to favor less developed countries.
The Brazilian foreign minister, Celso Amorim, played an active role in the agreement. He had already announced, at the WTO meeting, on Monday, November 30, that Brazil was willing to reduce its trade tariffs with poorer countries.