Brazil and Mercosur Romancing the Arabs for the Money

Celso Amorim, the Brazilian Foreign Minister says that the agreement that is being negotiated with the countries that are members of the Gulf Cooperation Council (GCC) will be beneficial to all the members of the Mercosur.

"All of the countries want to come closer to the countries of the Gulf due to the volume of resources they have. Brazil alone exported a total of US$ 6.5 billion in 2006, not just to the Gulf, but also to the group of Arab countries," said the minister, on arrival at Copacabana Palace hotel, in Rio de Janeiro, where the Mercosur summit is taking place.

Amorim pointed out the volume of capital that is available among the nations of the Gulf. "This is of great interest to us all as it is an agreement that includes trade, services and investment, and the countries of the Gulf have a large volume of funds at their disposal, which they want to invest. Attraction of these funds is interesting to us," he said.

Representatives of both blocs met yesterday at the Itamaraty Palace, in the center of Rio de Janeiro, to proceed with negotiations regarding the treaty.

According to ambassador Régis Arslanian, head of the International Negotiation Department at the Itamaraty, this is the first free trade agreement negotiated by the Mercosur as a whole, and is also one of the broadest.

"It is the Mercosur's first free trade agreement and is broad, very broad, as it is sustained by three pillars," he said.

The three pillars are those mentioned by Amorim: goods, services and investment. Due to its reach, Arslanian qualified the treaty as ambitious. The ambassador, who is the main Brazilian negotiator, is heading the talks with the GCC.

The Arab delegation, in turn, is headed by the undersecretary general for Economic Affairs at the GCC, Mohamed Al-Mazrooei. The meeting that took place yesterday between diplomats of both blocs is part of the preparatory meetings for the Mercosur Summit.

"Today we advanced further in the basic agreement, which has chapters about goods, services and investment, we also discussed technical barriers in phytosanitary matters and mentioned the matter of controversy solution," stated Arslanian.

According to the ambassador, the idea is to initial at least one part of the treaty during the Summit. The core agreement establishes the rules for three pillars, like, for example, the schedule for elimination of tariffs in the area of goods, which will take place in three phases: one immediately after enactment of the agreement, one after a period of four years, and the last after a period of eight years.

The diplomats also discussed the list of goods to be included in the treaty. All parties presented their offers in previous meetings and have also presented improved versions.

Arslanian did not give details about the contents of the lists, but he said that the GCC offer includes items of great interest to the Mercosur and gave as examples the car sector.

"Our offer is also broad," he said. According to the ambassador, the treaty covers over 90% of bi-regional trade. "There are some sensitive areas, but not so many," he said. "Not like the agricultural area in the negotiations with the European Union (EU)," he added.

In the opinion of minister Amorim, there is practically no sensitive area, i.e., that may generate controversy in the negotiations between both blocs. He revealed, however, that within the Mercosur there are matters to be negotiated.

"There are occasionally strong or excessively defensive reactions related to some matters. If you want to get everything at once, it is harder," stated the foreign minister.

Arslanian stated, however, that there are no great differences within the Mercosur, but agreed that there is no absolute consensus.

Services and Investment

In the area of services and investment, the lists with offers have not yet been exchanged, but Arslanian does not forecast difficulties. "The GCC is a net exporter of investment, they are interested in financial and telecommunications sectors, which are also mentioned in the agreement's basic text," he said.

Specifically in the area of investment, he said that the treaty should cover all areas of industry and agriculture, with reciprocal investment receiving national treatment, i.e., the rights and obligations of foreign investors will be the same as those of national investors.

Diplomats even discussed the question of rules of origin, which means the percentage of nationalization that each product must have to be included in the free trade agreement, but the negotiations have not yet been concluded. Questions of safeguards and controversy solution have not yet been negotiated.

Amorim would like the whole agreement to be signed now, but at the meeting both blocs agreed to sign it during the GCC ministerial meeting to take place in Saudi Arabia. "We are very close to signing the agreement, and have already closed various parts," added Arslanian.

The agreement is being discussed at the meeting of Mercosur ministers taking place in Rio de Janeiro. To Amorim, all ministers agree with the treaty. The details to be solved are just technical.

Anba – www.anba.com.br

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