Brazil: Mercosur and Egypt Dreaming of Free Trade

The Mercosur, the customs union between Brazil, Argentina, Paraguay and Uruguay, has already sent the Egyptian government a proposal for the basic text for a tariff preference accord to be signed between the South American bloc and the Arab country.

According to information supplied by the Itamaraty, the Brazilian Foreign Office, the text is a “skeleton” containing the general lines of what may be discussed.


The document was elaborated by the Brazilian Ministry of Foreign Relations and ratified by the remaining members of the Mercosur, as Brazil currently occupies the rotating presidency of the South American bloc.


Now the Itamaraty is awaiting an Egyptian government answer regarding the proposal, but the hope is for a “positive” answer. The objective is to start discussing the matters to be negotiated.


In November, a delegation from Egypt will be meeting Mercosur representatives in Brazilian capital Brasí­lia so as to proceed with the process.


In July, both parties signed a framework agreement in which they agree to negotiate.


The text sent to Egypt, according to sources in the Itamaraty, is similar to those previously sent to India and to the Southern African Customs Union, with whom the Mercosur is negotiating fixed preference treaties, which may be signed by the end of the year.


The document states, for example, that the parties agree on concluding the tariff preference agreements as a first phase to reach a free trade zone.


However, it places the main topics, like the lists of products and tariffs to be contemplated, the rules of origin and the means for controversy solution, in the annexes to be discussed at a later date.


Brazilian ambassador Régis Arslanian, who is currently the main Mercosur negotiator, informed that discussions regarding details of an agreement of the kind may take around one year.


A tariff preference agreement is different from a free trade agreement in that it may contemplate just a specific number of products and tariff lines.


With regard to a free trade zone, according to the rules stipulated by the General Agreement on Tariffs and Trade (GATT), the organization that preceded the World Trade Organization (WTO), most of the products (between 85% and 90%) have zero tariffs.


Fixed tariff preference treaties may only take place between developing countries, as is the case with the Mercosur and Egypt.


They are an exception to the WTO norms, which forecast that if a member gives preference to another, it will have to extend this preference to all other members of the group. The objective is to support trade between less developed nations.


The possibility of an agreement considering only some products also simplifies negotiations, as both parties may opt for leaving out sectors considered sensitive and include just the areas in which the economies are complementary.


ANBA ”“ Brazil-Arab News Agency

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