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Israel and Mercosur make progress on free-trade agreement

Globes (Tel Aviv) July 13, 2006

Israel and Mercosur make progress on free-trade agreement

Customs duties will be reduced, some immediately, and others after four, eight, or ten years for the most sensitive goods.

Stella Korin-Lieber

Israel and Mercosur (Mercado Comun del Sur, the Common Market of the South, comprising Brazil, Argentina, Uruguay, and Paraguay) are making progress in negotiations for a free-trade agreement. Mercosur and Israel representatives held intensive discussions last week. The Israeli delegation included officials from the Ministry of Industry, Trade and Labor, Ministry of Agriculture, and customs.

Customs duties in Mercosur countries are fairly high, and gradually cutting them will give Israeli exports a significant advantage. The goal is to try to reach an agreement by the year-end. In negotiations to date, the parties have reached agreement on most issues, and mechanisms, including the settlement of disputes, guarantees, and rules of origin.

Mercosur is the largest trade bloc in Latin America, and includes Brazil, one of the world’s ten largest economies. Mercosur operates as a roof organization, under which member countries have maintained joint foreign economic relations for 15 years. The joint framework is still shaky ; in effect Israel is holding parallel negotiations with four countries. Brazil is now taking over the presidency of Mercosur from Argentina, and Israel hopes that the tempo of negotiations will stay rapid.

Ministry of Industry, Trade and Labor foreign trade administration director Boaz Hirsch said, “These are important negotiations with a bloc of countries, to which Israeli industry strongly wants to export. We see the potential for expanding exports to these countries after this agreement is signed.” He said the present round of talks mainly dealt with reducing customs duties on industrial and agricultural products, after the parties exchanged proposals on mutual reduction and elimination of customs.

Despite wide differences in the opening positions relating to liberalization of agricultural products, the parties tried to bridge the gaps to reach a mutually beneficial agreement. The goal is to cover as much trade as possible and to gradually reduce customs, on the basis of sensitivity.

Products may be divided into groups for the purpose of customs reductions, some of which will apply immediately, and others after four, eight, or ten years for the most sensitive goods. The gaps on agricultural goods have not yet been bridged. These are Mercosur’s main demands, and the main stumbling block for reaching an agreement.

Israel’s main exports to Mercosur are chemicals and communications equipment. Israel’s main imports from Mercosur are food and agricultural products, including meat, grains, soy beans and fruit concentrates.

 source: Globes