BRASILIA, Brazil, Feb. 29 (UPI) — Latin America’s Mercosur trade bloc is keen to profit from Arab cash investments and expanding consumer markets while talks with the European Union on a free trade agreement remain stalled, officials said.
Brazilian government ministers have been wooing Arab investors after a visit to the United Arab Emirates and plans for similar initiatives in other oil-rich Arab states in the Persian Gulf region.
A Mercosur-Arab trade deal is far from sealed but Brazil made a promising start, winning pledges of Arab direct investments in the country and greater access to the gulf’s consumer markets.
Brazil has been cultivating the Arab region for decades and ran a lucrative arms trade with former Iraqi President Saddam Hussein during Iraq’s 1980s conflict with Iran.
Despite winning new concessions, however, Brazil ruled out an early deal on Arab petrochemical exports to Latin America, a key topic for Persian Gulf states seeking markets for their refineries.
A Mercosur deal with the GCC region, if finalized, would require parliamentary approval from each of the member states in the trade pact, which includes Argentina, Brazil, Paraguay and Uruguay as full members and Bolivia, Chile, Colombia, Ecuador and Peru as associates.
Venezuela, a full member, is awaiting Paraguayan ratification of its membership but is seen in both the Persian Gulf and Europe as a lucrative consumer market for both Arab and European exporters.
Brazilian Trade and Industry Minister Fernando Pimentel said after talks in Dubai both sides stand to benefit from a deal but free trade agreements between Arab states and Mercosur member states may take time.
“Brazil’s intention is to sign (a trade agreement) as quickly as possible but it cannot speak on behalf of the whole Mercosur,” he said. “The matter must pass the parliaments of those four countries before it can be signed,” Pimentel said, referring to founding members Argentina, Paraguay, Uruguay and Brazil.
He couldn’t say how soon Mercosur and the GCC would sign a trade agreement.
More than 10 percent of $60 billion in international investment channeled into Brazil last year is believed to be from Arab countries, officials said.
The Brazilian government says it will spend $403.5 billion on infrastructure projects through 2014, when it is the host country for the FIFA World Cup. Pimentel said the investment was needed to keep pace between Brazil’s export income and inward investment ratio and the facilities on ground to handle those large sums of cash.
At present, the Brazilian economic and financial infrastructure is struggling to cope with the virtual flood of cash.
Brazilian business and industrial sectors complain of red tape and inefficient customs clearance procedures.
Senior Brazilian officials said developing closer financial and trade links with the cash-rich Arab region was part of a national strategy to shield the economy from any potential fallout of the eurozone crisis.
More Brazilian companies are set to open offices in Dubai, officials said.
In the meantime, free trade talks with Europe remain stalled, partly a response to the eurozone crisis.
A European Commission report on trade talks with Mercosur accused the Latin American trade pact members of protectionist policies and singled out Argentina and Brazil for criticism.
“With protectionism as an ever present threat, we need to ensure that trade continues to be open to promote growth and jobs,” EC Trade Commissioner Karel De Gucht said.
The report said there were “no improvements” in the protectionism outlook in Mercosur countries. However, it said, talks could resolve existing issues and even lead to a much-awaited free trade treaty between the two blocs.