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Cablegate: Mercosul and India/Sacu Talking Turkey On Tariff

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 BRASILIA 000582

SIPDIS

USTR FOR SUE CRONIN
NSC FOR SHANNON, DEMPSEY, CRUZ
TREASURY FOR OASIA/SEGAL
USDA FOR U/S PENN, FAS/FAA/TERPSTRA
USDOC FOR 4322/ITA/IEP/WH/OLAC-SC

E.O. 12958: N/A
TAGS: EFIN ECON EINV ETRD PREL PGOV BR
SUBJECT: MERCOSUL AND INDIA/SACU TALKING TURKEY ON TARIFF
AGREEMENTS?

Ref: Brasilia 300

1. An article in the March 5-7 `Valor Economico' quoted
Itamaraty Negotiator Regis Arslanian's claims of progress in
negotiation of the Mercosul-India preferential tariff
agreement (PTA). Arslanian also spoke of the quick
conclusion of a PTA with the Southern African Customs Union
(SACU). Embassy's unofficial translation of the `Valor'
article follows in para 3 below.

2. COMMENT: Momentum of the Mercosul-India negotiations is
likely to continue apace so as to produce a deliverable for
signature by the June 30 target date, or perhaps even at the
UNCTAD meeting in Sao Paulo in mid-June. The SACU
negotiations, initiated before those with India, seem to be
finally coming out of hibernation. The scope of the SACU
agreement will probably mirror that of the Indian PTA, but
addressing the needs of the smaller members of SACU will
complicate and slow the negotiating process. The existence
of PTAs helps entice the private sector to explore these new
markets and -- perhaps more importantly for the GoB --
demonstrates political commitment to improving relations
with developing-country partners.

3. (Begin Text of Unofficial Embassy Translation)

(HEADLINE) Agreement with India Should be Completed by June

The director of Itamaraty's Department of International
Negotiations, Regis Percy Arslanian, advised yesterday that
the preferential tariff agreement between Mercosul and India
should be concluded by June 30. This agreement is
considered the first step towards an effective free trade
agreement and calls for the reduction of import tariffs on a
number of items.

The list of products presented by Mercosul to India for
tariff reduction contains approximately 1700 items, while
the Indian list has around 1600. The first meeting to
establish which products should be privileged in trade
relations between Mercosul and India ended last Wednesday
with the definition of 100 line items for each side. This
was an initial stage, just to test the waters, said the
diplomat. A further list of trade items to be opened up for
trade will be exchanged on March 31.

The Mercosul list includes some strong Brazilian trade items
like leather, agricultural products, ethanol, soy oil and
various kinds of meat. Arslanian advised that this last
product was also on the Indian list and was accepted by both
sides.

Despite the small quantity of products accepted by both
parties given the list offered by each one, the diplomat is
certain that negotiations will take a favorable tack in the
long run. "Little by little the quantity will increase, but
it is clear that not all of the 1700 products will be
considered," he emphasized.

The tariff levels to be allowed for the 100 products already
accepted for each country have also not yet been defined.
"Neither we nor the Indians have completed consultations
with the private sector. At some point, we are going to
define the margin of liberalization that we are going to
offer", said Arslanian. In Brazil, these consultations will
be done by the Ministry of Development, Industry and Foreign
Commerce.

Along with the definition of products, the governments of
the Mercosul countries and India are trying to finish
another three annexes to the free trade agreement: rules of
origin, dispute settlement and safeguards. The negotiations
for this agreement were initiated during the trip President
Luiz Inacio Lula da Silva made to India in January.

Itamaraty also revealed a note relative to the meeting of
the Trilateral IBSA Dialogue (India, Brazil and South
Africa) on the chancellor level that started yesterday and
ends today in New Delhi, the Indian capital. According to
the document, the ministers discussed among other subjects,
"the reform of the UN and the situation in the Middle East,
including the possibility of G-3 individual and group
actions in support of peace between Israel and Palestine."

Mercosul is also negotiating a preferential tariff agreement
with the Southern Africa Customs Union (SACU) as a
preliminary measure to a free trade agreement. "South
Africa proposed finishing negotiations by March 31, but we
are going to suggest another date in April," commented
Arslanian.

(two paragraphs on Mercosul/EU negotiations omitted.)

(End Text of Embassy Translation)

VIRDEN

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