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Montevideo, August 16th 2022 - 03:24 UTC

 

 

Mercosur clinches Singapore FTA, announces CET cuts

Thursday, July 21st 2022 - 09:35 UTC
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The closing of the negotiations was announced by Paraguay's Raúl Cano Ricciardi and Singapore's Gan Kim Yong The closing of the negotiations was announced by Paraguay's Raúl Cano Ricciardi and Singapore's Gan Kim Yong

The governments of all four members of Mercosur (Argentina, Brazil, Uruguay, and Paraguay) Wednesday agreed in Asunción to lower the bloc's common external tariffs (CET) by 10%.

While the mere existence of the trade association was in doubt following announcements from Presidents Jair Bolsonaro and Luis Lacalle Pou, the bloc also clinched a deal with Singapore.

The Brazilian leader chose not to attend this week's Summit in person and the Uruguayan head of state confirmed negotiations with China towards a Free Trade Agreement, to which the other bloc members were eventually invited out of politeness.

In that scenario, a free trade agreement with Singapore was signed and the CET reduction is to apply to at least 75% of the items traded.

According to local media reports, the 10% reduction was needed “to unlock Singapore.”

During a Common Market Council (CMC) meeting, Paraguay's Foreign Minister Julio Arriola explained that the CET decision will allow a 10% reduction “in a very broad universe of products.” Paraguay currently holds the pro tempore presidency of the bloc.

The quartet of foreign ministers also agreed that items with a 2% tariff will be reduced to 0%, while a position with a 4% tariff will be reduced to 3.6%. “It is a historic decision, an essential decision to add value chains to our products, particularly at a time of economic crisis and international inflation,” Brazil's Carlos França explained.

The Bolsonarist dignitary underlined that the reduction of the CET “will benefit the region's low-income population while making Mercosur ”more open and integrated to the world.“

While consensus was very strong around Singapore, Uruguay pressed on with its Chinese endeavors. ”I had warned yesterday that far from the story that people had wanted to install, the atmosphere was good,“ Foreign Minister Francisco Bustillo told reporters.

”And the atmosphere continued to be good beyond some statements in the speeches of one or the other, simply marking the differences of visions that we could have. The atmosphere continues to be good,“ added Bustillo, who also foresaw no rifts among the bloc members: ”We all have the same common vision, which is to do the best for our peoples and, in short, to work together, and that is what it is all about.”

The Singapore deal took six rounds of negotiations dating back to 2019 2019 to be finalized Wednesday. The closing of the negotiations was announced Wednesday by Paraguay's Deputy Minister of Economic Relations and Integration, Raúl Cano Ricciardi, and Singapore's Minister of Trade and Industry Gan Kim Yong.

In 2021, trade between the two parties totaled US$ 7 billion. Among Mercosur's main exports were poultry products, ferroalloys, pork, beef, and iron ores, while most imports consisted of insecticides, integrated circuits, medicines, and ships.

Presidents Alberto Fernández of Argentina, Mario Abdo Benítez of Paraguay and Lacalle Pou are to convene in Asunción Thursday for the first face-to-face summit after the COVID-19 restrictions, while Bolsonaro is expected to join virtually.

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