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Israel-S. America trade deal imminent

Jerusalem Post | Nov. 28, 2007

Israel-S. America trade deal imminent

Associated Press

Mercosur, South America’s four-nation trading bloc, is poised to clinch a historic free-trade pact with Israel, officials said Wednesday.

The deal, expected to be completed Thursday, would be the first free-trade agreement for Mercosur, a market of nearly 250 million people covering most of South America.

"The idea is to finish all the details and wrap up the whole thing tomorrow (Thursday)," said Itzhak Levanon, Israel’s ambassador to international organizations in Geneva. "It is something very important because it will be the first trade agreement for Israel in South America."

Israel already has a number of trade agreements, including with the United States, European Union, Canada and Mexico.

But Mercosur — comprised of Argentina, Brazil, Paraguay and Uruguay — has struggled in attempts to reach a deal with the 27-nation European Union because of disagreements over how much to open up Europe’s protected farm markets.

Brazil also was instrumental in thwarting attempts by the US to create a Free Trade Agreement of the Americas that would have stretched from Canada to Chile, becoming the world’s largest free commerce zone.

Trade flows between Israel and South America are relatively small. The package is expected to facilitate freer movement of some goods traded back and forth, but is not expected to usher in dramatic commercial expansion.

Levanon declined to comment on what products or services the agreement would include because talks were ongoing. He said the final treaty would probably be signed in the middle of next month, most likely in Uruguay.

The talks in Geneva this week- the eighth round between Israel and Mercosur - built on previous discussions in Brazil, Israel and Uruguay, said Levanon, who represents the Jewish state at the World Trade Organization.

"It is on the way to being done, barring anything unexpected, which I don’t foresee," he told The Associated Press. "This shows how important the Israeli market has become."

In 2005, Mercosur started negotiations with the six-member Gulf Cooperation Council on a free trade zone that aimed to provide South America access to a lucrative import market. Talks with the group including Kuwait and Saudi Arabia are ongoing.

But experts were skeptical from the start on whether the two blocs would be able to look beyond their domestic agendas and resist potential American efforts to lure them away with lucrative bilateral trade deals.

It was not clear if Israel was trying to complete its deal with Mercosur before Venezuela joined the trading group. The oil-rich country’s bid to enter Mercosur has already been approved by the legislatures of member nations Argentina and Uruguay. But still to be convinced are lawmakers in Brazil, where President Hugo Chavez has ruffled feathers for suggesting that its Congress was a "pirate’s parrot" of the United States.

Chavez also tried to rally world leaders in 2006 to halt the IDF offensive in Lebanon, calling it a "fascist" assault and comparing it to the Holocaust.

Countries are increasingly seeking bilateral or regional trade deals, which are seen as the best option for export-driven growth in the absence of a new global pact among the 151 members of the WTO.

The United States has been the most active on the bilateral front, racking up over a dozen agreements since the WTO’s current round of trade talks began in 2001, mostly with smaller countries. The agreements have caused concern among other governments — including those in Mercosur — and at the WTO that the US was distracted from the multilateral talks, where the potential benefits of a deal are much greater, especially for poorer nations.

 source: Jerusalem Post