MERCOSUL AND INDIA/SACU TALKING TURKEY ON TARIFF

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