São Paulo – As the visit of king Abdullah II to Brazil approaches, representatives of the Mercosur and of the Jordanian government met last Monday (13), in Amman, for the first round of negotiations concerning a bilateral free trade agreement. According to the Brazilian ambassador in Jordan, Fernando de Abreu, who attended the meeting, the diplomats described the talks as “very good”.
“The climate is very positive, there is an understanding and there were no difficult points. The prospects are great," Abreu said to ANBA on the telephone yesterday. According to him, the two parties have already traded lists of products to be included in the treaty, discussed rules of origin as well as economy- and tariff-related aspects of each country and trade policies. Jordan already maintains agreements of the type with other countries and blocs, such as the United States and the European Union.
In order to be considered a free trade agreement, the treaty must include the vast majority of products in the trade basket of the countries involved. In this respect, some obstacles must be overcome.
The rules of origin for the Mercosur member countries (Argentina, Brazil, Paraguay and Uruguay) provide that, in order to have tariff exemption, a product sold from one country to the other must have at least 60% of its inputs originated in the country of origin. There is an exception to Paraguay and Uruguay, which are smaller economies, and thus are allowed to export goods with up to 50% nationalisation rate to Brazil and Argentina until 2012.
In the case of agreements signed by Jordan, the rules of origin only require a 35% nationalisation rate, said the ambassador. He believes, however, that this issue can be solved during the negotiation process.
According to the diplomat, it was agreed upon that, at least in the beginning, the treaty is going to concern only the free trade of goods, services not included. The proposals of each party, after the product lists are analysed, should be submitted by the end of February, with new roundtables forecast for the first half of 2009.
The governments are going to assess which sectors included in the lists are more or less sensitive, and what can be the reach of the tariff reduction. It is worth noting that, in the case of the Mercosur, the proposals must be approved by the four countries in the bloc before becoming valid. Negotiations with Jordan started in early July.
The delegation of the South American bloc was led by the head at the International Negotiation Department of the Brazilian foreign office (Itamaraty), ambassador Evandro Didonet, and included five representatives from Brazil, three from Argentina, two from Uruguay and one from Paraguay.
Fertilisers
On the sidelines of the diplomatic negotiations, the director at the Department of Commercial Affairs at the Foreign Relations Secretariat, a branch of the Brazilian Ministry of Agriculture, Benedito Rosa do Espírito Santo, visited two Jordanian fertiliser sector companies. The ministry decided to place Brazilian farmers in direct contact with international fertiliser suppliers, aiming to reduce the cost of these inputs and avoid the influence of large trading companies that operate in the Brazilian fertiliser market.
According to Abreu, the representative of the Ministry of Agriculture visited companies Jordan Phosphate Mines Company, for phosphates, and Arab Potash Company, for potassium. The ambassador also stated that the meetings “opened up really good perspectives”. “This action calls for negotiation, but it represents a very important step forward in bilateral trade, and at the same time it should help solve the problem involving fertilisers in Brazil and generate Brazilian investment here [in Jordan]. I am very optimistic about this possibility,” he said.
Brazil has huge capacity for agricultural production, but at the same time it is too dependent on imports of inputs. Abreu said that the phosphate sector company expressed willingness to sell its products to Brazilian farmers, and is interested in joint investment in Jordan for fertiliser manufacturing. Representatives of the Brazilian agricultural sector should travel to the Arab country soon to resume contacts. To the ambassador, should agreements of this kind come to fruition, they may “open up a new avenue” in trade between the two countries.
Yesterday, the Mercosur diplomats and the director at the Ministry of Agriculture headed to Egypt, where they are going to follow a similar schedule. Today and tomorrow, the team headed by Didonet is going to resume talks with the Egyptian government regarding a trade agreement, and Benedito Rosa will continue to seek contacts in the fertiliser area.
*Translated by Gabriel Pomerancblum
