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Israel signs free-trade accord with South American bloc

Haaretz | 18 December 2007

Israel signs free-trade accord with South American bloc

By News Agencies

Mercosur, the South American trade bloc, signed a free-trade agreement with Israel on Tuesday, its first pact with a country outside of Latin America.

The deal was announced during a two-day summit of Mercosur leaders in the Uruguayan capital and followed two years of negotiations to bolster trade ties between South American countries and Israel.

"This agreement is an enormous satisfaction that will help develop our links to the Mercosur countries," a statement from the Israeli Embassy in Argentina said.

Trade between Israel and Mercosur countries neared $1.6 billion in 2006. Mercosur is comprised of full members Argentina, Brazil, Paraguay and Uruguay, with Venezuela awaiting approval to join the trade group.

Associate members include Bolivia, Chile, Colombia and Peru.

"It is something very important because it will be the first trade agreement for Israel in South America," said Itzhak Levanon, Israel’s ambassador to international organizations in Geneva.

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

But Mercosur 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 U.S. 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.

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 last month - the eighth round between Israel and Mercosur - built on previous discussions in Brazil, Israel and Uruguay, said Levanon, who represents Israel at the World Trade Organization.

"It is on the way to being done, barring anything unexpected, which I don’t foresee," he said. "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 Israeli military 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 U.S. was distracted from the multilateral talks, where the potential benefits of a deal are much greater, especially for poorer nations.

 source: Haaretz