Foz do Iguaçu – The United Arab Emirates want to proceed with negotiations for the free trade agreement between the Mercosur and the Gulf Cooperation Council (GCC), a bloc comprising Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the Emirates. The process is halted due to obstacles, mainly the inclusion of petrochemicals, the main items exported by the countries in the Arab bloc. Presently, the Emirates are holding the rotating presidency of the GCC and Brazil, the Mercosur’s, a position that will be passed on to Paraguay for the coming six months.
The matter was discussed this Thursday (16th), in Foz do Iguaçu, in the state of Paraná, at a meeting between the minister of Foreign Affairs of the Emirates, Abdullah Bin Zayed Al Nahyan, and the Brazilian minister of Development, Industry and Foreign Trade, Miguel Jorge. Nahyan also spoke with the Brazilian minister of Foreign Relations, Celso Amorim. The meetings were part of the activities of the 40th Summit of Presidents of Mercosur Member and Associate Members, which will continue until Friday (17th).
According to Michel Alaby, the secretary general of the Arab Brazilian Chamber of Commerce, who attended the meeting between Nahyan and Jorge, the Arab minister claimed that the Mercosur’s proposal of leaving petrochemical products out of the deal is not acceptable to the Gulf countries.
Nahyan also stated that the signing of a free trade agreement between the parties would enable up to a six-fold increase in Mercosur exports to Gulf countries over a three-year period. Barriers to the inclusion of products of Arab interest in the framework agreement are being imposed by the Brazilian petrochemical industry, headed by Braskem.
According to Alaby, Nahyan claimed that sovereign funds based in the Emirates have US$ 7 billion invested in Brazil, and that a free trade agreement could attract further investment into South American. The minister declared that the fund has nearly US$ 1 trillion for new investment.
In a press conference, Amorim said that a joint statement has been signed to "reactivate and give a new boost" to the process, and added that the inclusion in an eventual free trade agreement of certain food products exported by Brazil is also met with resistance from the Arabs. The minister stated, however, that the Mercosur does not intend to halt the negotiations.
"We want to develop the normative part, discuss what we can do with regard to services. In the meantime, progress is made, and I am sure that joint ventures will take place (between companies from the two blocs). Amorim underscored that this is the second time in a year that Nahyan comes to Brazil, and that attests to his strong interest in Mercosur countries.
During the meeting with Miguel Jorge, the Emirati minister also approached the issue of double taxation on investment by companies and sovereign funds. Nahyan stated that there already is an agreement in effect preventing double taxation on these types of investment in Russia, and that he hopes Jorge may present that same proposal to the Brazilian minister of Finance, Guido Mantega.
New agreements
During the event, new framework agreements were signed to give rise to free trade negotiations, including agreements between the Mercosur and Syria and the Mercosur and Palestine. The Syrian minister of Economy and Trade, Lamia Assi and the Palestinian minister of Economy, Hassan Abu Lidbeh, were in attendance.
According to Amorim, there is no set deadline for negotiations to be completed. "There are some general rules, and you establish a committee that carries out the negotiation per se. That is what took place earlier with Israel and with Egypt," explained the minister, referring to two countries that have already signed free trade treaties with the South American bloc. "It is very hard to know exactly when the deadlines will be. Sometimes it takes a year, sometimes more," he finished off.
Alaby also attended the meeting between Miguel Jorge and Lamia. According to the Arab Brazilian Chamber secretary, the Syrian minister underscored that her country already has free trade agreements with countries such as Turkey, Iran, Jordan, among others, and that a similar agreement with the Mercosur would grant the bloc access to a market of 300 million-plus people.
Lamia called for help to find Brazilian suppliers of live cattle, as well as partners to sell technology and equipment for halal slaughter in her country, a process that is still mostly done manually. According to Alaby, The Arab Brazilian Chamber should aid in the search for suppliers.
During the meeting, the possibility came up of an eventual partnership with the Brazilian Agricultural Research Corporation (Embrapa) for an agricultural cooperation agreement that should be discussed in April 2011, during the Mercosur-Syria seminar, which will be held in Brazil.
*Translated by Gabriel Pomerancblum
