The creation of a free trade agreement between the Mercosur, customs union of the south between Brazil, Argentina, Paraguay and Uruguay, and the Gulf Cooperation Council (GCC) will result in a rapid increase in trade between the two economic blocs, in the opinion of the ministers of Foreign Relations of the countries involved.
“I am sure that the value of trade will increase rapidly, but also the exchange of information and cultural bonds. We are opening a new window of cooperation, building new bridges between the two regions,” said the minister of Foreign Relations from Bahrain, Mohammed Bin Mubarak Al-Khalifa.
Al-Khalifa, the secretary general of the GCC, Abdul Rahman Bin Hamad Al-Attiyahd, and the ministers from Brazil, Celso Amorim, from Paraguay, Leila Rachid, from Uruguay, Reinaldo Gargano, and from Argentina, Rafael Bielsa, signed yesterday the framework agreement that gave start to the negotiations for a free trade treaty between the two blocs. The possibility of a treaty was raised in February 2004.
The GCC is formed by Saudi Arabia, Bahrain, United Arab Emirates, Qatar, Oman and Kuwait, countries whose Gross Domestic Products (GDP) add up to US$ 436.6 billion.
“The GCC is a very strong economic bloc in the Arab world,” added the Kuwaiti minister of Foreign Relations, Mohammad Sabah Al-Salem Al-Sabeeh.
Signing the framework agreement was considered by the ministers as one of the high points of the summit for South American and Arab countries, that started yesterday and finishes today in Brasília.
“In my opinion, an agreement such as this one would already be enough to justify a summit,” said Celso Amorim.
Leila Rachid added that the trade treaty will ensure effective access to the two markets.
“We need access to new markets represented by emerging economies,” she said. “We are complementary economies, they need the foods produced in the Mercosur and we need oil and oil products,” she added.
To illustrate the possibility of an increase in trade, Leila said that before the year 2000 exports from Paraguay to the GCC countries were almost inexistent, but, in the last year, they reached US$ 28 million. “And this was without the agreement.
In the same line, Amorim said that, after signing the trade agreement between the Mercosur and the Andean Community, trade between the two blocs increased 50%.
In the case of Brazil, he expects that in three years global trade with all Arab countries reach US$ 15 billion, or even US$ 20 billion.
Last year, trade between Brazil and the nations of the Arab League added up to more than US$ 8 billion.
A joint committee will be formed to negotiate the terms of the trade treaty. Al-Attiyahd hopes the group’s work is finalized already this year. The first meeting will take place in Riyadh, capital city off Saudi Arabia.
The framework agreement establishes the lines of action that will be taken by the two blocs. They have committed to promote economic, technical, trade and investments cooperation and to expand and liberalize trade.
To allow for the increase of business relations, the two blocs have also committed to encourage the flow of capitals, creating joint projects and facilitating corporative investments, as well as exchanging economic missions and promoting business fairs.
ANBA – Brazil-Arab News Agency