18 March 2018 11:48 AM

Egypt-Mercosur Free Trade Agreement

Tuesday، 14 May 2013 12:00 AM

Egypt signed on 3/8/2010 a preferential Free Trade Agreement (FTA) with the Common Market of the South (Mercosur), which allows preferential privileges for the Egyptian exports to enter the Latin American markets, and to reduce the cost of Egyptian imports from Latin American countries such as sugar, meat and soy oil.

The FTA aims at cutting tariffs by more than 90% between Egypt and the Mercosur countries and cancelling customs duties on agricultural goods, along with finding solutions to the issues of the rules of origin and the preferential guarantees and promoting cooperation in the fields of investment, services and others.

It was signed by Egypt's Minister of Trade and Indus

try after the opening of the Mercosur summit in Argentina on August 3, 2010.

The summit was attended by the heads of the countries that make up the Mercosur: Argentina, Brazil, Uruguay, Paraguay, Chile, Bolivia, Ecuador, Colombia, Peru and Venezuela.

Egypt is considered the first Arab and African country to sign this important agreement with Latin America countries, which will open up new markets for the Egyptian exports. At the same time, it will strengthen Egypt's exports competitiveness, especially in the markets of Argentina and Brazil, which are considered major rising economic powers in the world.

This FTA ensures that Egypt will have its needs of food commodities at the best prices on the long run. It will also work to increase the confidence of Latin America investors in Egypt, and will, therefore, lead to the increase of joint ventures. It contains guarantees that will prevent damage to the Egyptian industry, and it embodies the idea of ​​deepening economic cooperation between the countries of the South.

It will also open up new prospects for economic cooperation between the two Continents of Africa and Latin America.

The Egyptian government aims through this agreement at promoting foreign trade and diversifying export markets. It has also expected to double the volume of trade between Egypt and the Mercosur countries, which currently amounts to $ 7.2 billion. The volume of trade exchange between Egypt and the Mercosur has risen by 58.7% from 2004 to 2009 to hit $ 2.1 billion and Egypt is looking forward to increasing its cooperation with Mercosur in various economic sectors such as industry, technology and tourism.

It is noteworthy that the signing of the FTA between Egypt and Mercosur countries came after six rounds of negotiations during which Egypt was keen on actively participating with Latin American countries to ensure access to important privileges in commodity lists.

The FTA with Mercosur provides a lot of privileges to Egypt:
It is considered a tool for ensuring greater opportunities for Egyptian exports to access the Mercosur markets. There will be trade liberalization between the two parties over a 10-year period, taking into account that about 47% of Egyptian exports to the Mercosur countries will be exempted from customs duties once the agreement enters into force. The most important exports are chemicals, engineering goods and textiles.

The agreement will provide a decrease at the agricultural commodities price.

The agreement also stipulates the establishment of a joint committee between Egypt and the Mercosur to evaluate the process of trade liberalization, which was established and led the study of the development of trade between the two parties. The annual meetings of the committee are considered an important mechanism for consultation between the two sides to resolve the problems that may face their trade exchange.

The agreement comes as a development of the framework agreement signed between Egypt and the Mercosur on July 7, 2004 to establish a free trade area between the two sides on July 2004 and it confirmed the following:

• Establishing clear rules for the future to promote the development of trade and mutual investments between Egypt and the four Mercosur countries Argentina, Brazil, Paraguay and Uruguay.

• Commitment to promoting international trade regimes in accordance with the rules of the World Trade Organization.

• Recognizing that free trade agreements contribute to the expansion of world trade, and to maximizing global stability, particularly in the development of closer relations between peoples.

• Putting into consideration that the process of economic integration not only includes progressive and reciprocal liberalization of trade, but also includes the establishment of a comprehensive economic cooperation.

Common Market of the South (Mercosur)

The Mercosur is composed of four member countries (Argentina, Brazil, Paraguay and Uruguay). It is considered one of the most significant economic blocs in the world and also the most successful bloc in South America. It ranks fourth in terms of economic importance after the EU, NAFTA and ASEAN.

About the Mercosur

It was established in 1991 by the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of Ouro Preto. Its purpose is to promote free trade and the smooth movement of goods, people, and currency.

Chile and Bolivia have joined the Mercosur in 1996, Peru in 2003, and Ecuador, Colombia, and Venezuela in December 2004, all as partners.

The Institutional Structure of the Mercosur

1- The Council of the Common Market (CCM)

The CCM is the highest organ of the Mercosur and is fully authorized to supervise the implementation of the Asunción Treaty. It consists of Ministers of Foreign Affairs and Ministers of Economy of the member States, or their equivalents. States Parties hold the 6-month presidency of the CCM on a rotation basis.

2- The Common Market Group (CMG)
The CMG is the executive organ of the Mercosur and is responsible for monitoring the compliance with the Asunción Treaty. The CMG undertakes executive procedures to liberate trade and coordinate economic policies.

The CMG consists of four members and four alternates for each country, representing the foreign and economy ministries and the central banks of the member States.

3- The General Secretariat
The General Secretary is the depository of the documents and issues the official statements of the Mercosur.

4- The Economic-Social Consultative Forum
The Forum plays a consultative role and represents the different economic and social sectors.

5- Working Sub-Groups

There are several groups in charge of close monitoring and implementation of the Mercosur's decisions and preparation of studies. These groups are specialized in many fields, such as trade, customs, industry, transport, and labor.

6- The Joint Parliamentary Commission

This Commission is the organ representing the parliaments of the States Parties within Mercosur.

7- The Mercosur Trade Commission (MTC)
The CCM consults the MTC regarding trade issues, establishing new mechanisms for common trade policies and unifying customs. The MTC also follows up with the developments of the issues of trade policies of the member States.

8- The Permanent Court
This Court is located in Asunción, Paraguay and is in charge of reviewing the policies of the Mercosur.

9- The Administrative Court for Labor
This Court is in charge of labor issues in the Mercosur member States.

10- The Consultative Forum
This Forum deals with the federal states, provinces and governorates of the Mercosur.

Mercosur external relations

The Mercosur is committed to the negotiations with the European Union to implement the Free Trade Agreement between both sides. The group also came out with positive results from the dialogue with EFTA (Switzerland, Norway, Liechtenstein and Iceland) in November 2004. The dialogue has been resumed with CER (Australia and New Zealand) in November 2004. There is contact between the Mercosur and the Community of Portuguese Language Countries (CPLP).

A framework agreement was signed between the Mercosur and Egypt, Argentina,
on July 7, 2004

A Framework Agreement between the Mercosur and Morocco was signed during the visit of the Moroccan King to Brazil on November 26, 2004.

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