Free trade with South America a Step Closer

Daniel Kennemer, Jerusalem Post) May 6, 2006 — A free trade agreement between Israel and several Latin American countries took another step towards realization recently with the closure of a second round of talks.

A delegation including representatives of the Industry, Trade and Labor, Foreign and Justice Ministries and the Israeli Tax Authority recently returned from a second round of talks in Argentina on the establishment of a free trade with the Mercosur trade block.

Negotiators will meet again this month in Jerusalem, in an attempt to complete the talks by July.

The Argentina discussions focused on origin rules, conflict resolution, customs arrangements and other legal issues, as well as how to reduce customs. It was decided that each side would prepare a list of export goods in which they have a special interest.

Mercosur (el Mercado Com n del Sur) brings together Brazil, Argentina, Uruguay and Paraguay. At present, the average important duty on Israeli goods coming into Mercosur stands at 11 percent.

A free trade agreement with the block would "provide Israeli exporters a substantial advantage in exports to Latin America, in particular to economies enjoying fast growth, such as Brazil," said Industry, Trade and Labor Foreign Trade Authority Director Boaz Hirsch.

Additionally, in the absence of such an agreement, a pending trade deal between Mercosur and the European Union - currently being negotiated - could hurt the competitiveness of Israeli exporters.

The ministry's director for bilateral agreements, Merav Gonen, said the talks were held in a positive atmosphere, and that the agreement was "advanced." Nonetheless, the negotiations are complex and include several difficulties, she noted, citing Mercosur's "great interest" in promoting agricultural exports to Israel. Gonen described agricultural trade as "highly sensitive" for Israel, particularly with leading agricultural producers Argentina and Brazil.

Hirsch, called the goal of reaching an agreement by July "ambitious."

The two sides hope to build on the positive momentum created in the recent talks and the first round, held in Jerusalem in February, he said.

Separately, Federation of Israel Chambers of Commerce President Uriel Lynn said he would be in Cyprus next week to lecture on Israel's economy and meet with Cypriot Finance Minister Michael Sarris, Commerce and Industry Minister George Lillikas and Cyprus Chamber of Commerce and Industry President Manthos Mavromatis to discuss the development of trade and investments between the two countries.

Though the Cypriot population only counts some 785,000, the country has made "significant economic achievements," Lynn noted, adding that "We have great interest in strengthening trade links, and especially in expanding imports from Cyprus at the expense of imports from bigger countries."

A member in the EU since May 2004, Cyprus acts as a "bridge between East and West," Lynn said.

Israeli companies currently import $25 million worth of goods from Cyprus, primarily electronic equipment and machinery, plant products, raw metals, mineral products, and optical and medical equipment. Some 259 Israeli companies export more than $543m. in goods to Cyprus, primarily chemical industry products (91%), electrical equipment and machinery and plastic and rubber products.