San Juan, Argentina – The Argentinean minister of Foreign Relations, Hector Timerman, announced today (2nd) that the Mercosur has signed a free trade agreement with Egypt. The details of the agreement should be announced tomorrow, during the meeting of presidents of Argentina, Brazil, Paraguay and Uruguay. According to the Argentinean foreign minister, this is a display of what the Mercosur means.
The free trade agreement covers 95% of trade between Brazil and the Arab country, according to information supplied by the head of the International Negotiation Department at the Brazilian Foreign Ministry (Itamaraty), ambassador Evandro Didonet, who is now in San Juan, Argentina, where he attended the final meeting for negotiating the treaty, and where the South American bloc’s summit is being held.
“The agreement covers virtually all of trade between Brazil and Egypt,” said the diplomat to ANBA by telephone. “The exceptions are few,” he added, citing as examples products such as tobacco and wines, which Egypt does not include in trade agreements.
Didonet said that the document’s completion is especially important because it is the first of its kind to be signed with an Arab country, and because it was signed precisely with Egypt, which is the most populated country in the Arab world and has special historical, political and economic importance in the region.
This is the second free trade agreement signed by the Mercosur and a country from outside Latin America. The first one was signed with Israel. The South American bloc also maintains trade agreements with Southern African countries and with India, but these are fixed tariff preference agreements, which cover a smaller range of products.
The ambassador claimed that a “satisfactory balance” has been reached in matters that were still pending prior to the last negotiation meeting, held last weekend, such as the inclusion of items such as chicken, soluble coffee and certain types of paper in the tariff reduction schemes offered by Egypt.
With regard to chicken, for instance, he said that “the line of higher value [products]“ has been included in Brazilian exports in the sector. The tariff reduction schemes will enter into force in zero-, four-, eight- and ten-year periods and concern 97% of the tariff lines in bilateral trade, in addition to representing 95% of the bilateral trade value. The tariff reductions due in up to four years include 46% of the tariff lines.
The agreement was signed by the ministers currently in San Juan attending the Mercosur Summit. Brazil was represented by foreign minister Celso Amorim and Egypt, by the minister of Industry and Trade, Rachid Mohamed Rachid. In order to come into force, the treaty still needs to be signed by the parliaments of the countries involved: Brazil, Argentina, Paraguay, Uruguay and Egypt. The agreement started being discussed in 2004.
In the first half, Brazil exported the equivalent of US$ 732.5 million to Egypt, virtually the same figure as in the first half last year, according to data supplied by the Brazilian Ministry of Development, Industry and Foreign Trade.
Egypt is the third leading market for Brazilian products in the Arab world, and the first in Africa. The main products shipped in the first six months of 2010 were beef, sugar, iron ore, chicken, tobacco, calcined alumina, chassis for buses, soy oil, diesel engines and processed meat.
According to information supplied by the Itamaraty, out of the 25 main products exported from Brazil to Egypt, 22 will have zero tariff by the end of the tariff reduction period, I.e. 10 years. Last year, shipments of these items amounted to US$ 1.3 billion. For the sake of illustration, total Brazilian sales to the Arab country amounted to US$ 1.4 billion in 2009.
On the other hand, sales from Egypt to Brazil totalled US$ 57.7 million in the first half, representing growth of 101% over the same period of 2009. The main items shipped were urea, carbon black, leathers, waxes, cotton, cement, shavers and petrochemicals.
*Translated by Gabriel Pomerancblum with information from Agência Brasil
