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Brazil: Mercosur Opens Up to Arab World

Negotiations for the preference treaty between the Mercosur, the customs union between Argentina, Brazil, Paraguay, and Uruguay, and Egypt will begin again in November, when an Egyptian government delegation will be visiting Brazil’s capital, BrasÀ­lia, to meet authorities of the Mercosur.

This information was provided on October 15 by Régis Arslanian, director of the department of international negotiations at the Itamaraty (the Brazilian Foreign office), during a luncheon promoted by the Association of Brazilian Companies for Market Integration (Adebim).


“There is great Mercosur interest in Egypt, as it is a very important country,” stated Arslanian to ANBA, after the luncheon. According to him, during the meeting in Brasí­lia the guidelines for the accord will be negotiated. Brazil currently occupies the rotating presidency of the Mercosur.


At this moment, the products included in the treaty will start being negotiated, also the rules of origin, i.e., the level of nationalization in products for them to be included in the accord.


Other items to be discussed: safeguarding and antidumping codes, and defense mechanisms that both parties may use in case of non-loyal trade practices.


Before the meeting, the Mercosur plans to send Egyptian authorities a proposal regarding the guidelines.


“Thus, when the meeting takes place, we are going to gain time and will even be able to sign a basic accord immediately, and then go on to discussing the details, like the products and other specific terms,” stated Arslanian.


He did not want to define a span for the negotiations to be completed, but told ANBA that accords of this kind rarely take less than one year to be signed.


In July, the Mercosur and Egypt had already signed a framework agreement in which they showed interest in starting negotiations.


In a fixed tariff preference agreement, the initial objective of negotiations with Egypt, some products to receive reciprocal benefits are defined.


It is something a little more restricted than a free trade agreement. The creation of a free trade zone is the final target of the treaties.


The Mercosur is negotiating fixed preference treaties with other countries and blocs, like India, for example, which involve a list of 900 products.


With the Southern Africa Customs Union the list negotiated includes from 2,000 to 3,000 products. The Itamaraty hopes that these two accords may be signed at the next Mercosur Summit, to take place in the city of Ouro Preto (in the southeastern Brazilian state of Minas Gerais) in December.


Even without the accord, Egypt is already one of the main Brazilian trade partners among the Arab countries.


Between January and September this year, Brazilian exports to the Egptian market generated US$ 468.6 million, against US$ 323 million in the same period in 2003, meaning an increase of 45%.


The main products in the trade basket are cattle beef, iron ore, sugar, car chassis with engines and iron and steel pipes.


The trade balance, however, is uneven. Brazil imported just US$ 26.9 million from Egypt between January and September, less even than in the same period last year, when the purchases totalled US$ 27.9 million.


The main items in the trade basket are super-phosphates (used in fertilizers), naphtha for petrochemicals, fertilizers, cotton thread, and carbon blacks (used in the rubber and ink for plastic and paper industries).


Morocco


The Mercosur has also already started negotiations for accords with other Arab countries, like Morocco. Arslanian revealed that on October 14 he sent a telegram to the Brazilian embassy in Moroccan capital Rabat, stating that the South American bloc is ready to negotiate.


“We are ready and prepared to sign a fixed preference accord, always considering the possibility of reaching a free trade agreement,” he said.


In July, during the Mercosur summit in Argentina, the four partners in the bloc had already considered the possibility of beginning talks with the Arab country.


The Itamaraty hopes that a framework agreement, like what has already been signed with Egypt, be signed with Morocco before the summit between Arab and South American heads of state, scheduled for May 10 and 11, 2005, in Brazil.


Morocco is also a great Brazilian trade partner among the Arab nations. From January to September, Brazilian shipping to the country have already generated US$ 259 million, against US$ 160 million in the same period last year, growth of 68%.


The main items exported in the period were sugar, wheat, the soy complex, (grain, ground, and oil), cars with diesel engines, and highway tractors.


The trade balance in this case is more level. Between January and September, Brazil imported the equivalent to US$ 190.7 million from Morocco, against US$ 154.8 million in the same period in 2003, an increase of 23.2%.


The main products in the basket are raw materials for fertilizer production, transistors, sardines, lubricant oils, and olive oil.


Arabian Gulf


Also among the Arabs, the Gulf Cooperation Council (GCC) has already shown interest in an accord with the Mercosur.


The bloc includes Saudi Arabia, Bahrain, the United Arab Emirates, Kuwait, Oman, and Qatar. Saudi Arabia and the United Arab Emirates are the two main Brazilian partners in the region.


“The Mercosur countries have already shown interest in this negotiation,” stated Arslanian.


However, he stated that talks with the GCC should be expanded “closer to” the summit to take place in May 2005, when the Arab and South America countries will be more sure of the commercial profile of the parties involved.


At the event on Friday, the diplomat spoke to businessmen in various sectors of the economy. Among those present was the president of the Adebim, Michel Alaby, who is also secretary-general of the Arab Brazilian Chamber of Commerce (CCAB) and CCAB president Paulo Sérgio Atallah.


ANBA – Brazil-Arab News Agency

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