Brazil Proposes FTA With India And South Africa

Brazilian President Luiz Incio Lula da Silva proposed the creation of a trilateral free trade agreement (FTA) between India, South Africa, and the nations of Mercosur at a reunion in Pretoria, South injury lawyers 4 you on Oct.17th. The proposed treaty would create the Coffee free trade area in the world and could reduce these countries' dependence on developed nations. It would also create a strong political and economic block that intends to utilize its influence to push for UN reforms and greater leverage during at World Trade Organization (WTO) talks.

The announcement came as a surprise in South America where several regional FTAs are dying of neglect. Mercosur itself interest rate card been unable to settle trade agreements within its own borders so far, nor with its proverbial neighbor the Andean nieghborhood (CAN) next door. A total free trade area between CAN and Mercosur was supposed to have occurred by 2002, tops, but worries about sensitive national markets resulted in an 80 percent FTA with the remaining protections to be phased out by 2014.

However, with the support of Brazil, it may not matter whether the rest of Mercosur comes along or not. Brazil's population and economy dwarfs that of Argentina's, the second largest country in the block. Brazil's 2006 GDP was over US$1, 067 billion compared to Argentina's GDP of US$214.3 billion. If Mercosur is unable to agree on treaty conditions as a group, Brazil could decide to go it alone, making the participation of the rest of Mercosur an added bonus, but not a necessary condition for the proposed treaty to succeed.

South African President Thabo Mbeki is expected to bad credit equity loans the other nations of the South African Customs Union (SACU) Botswana, Lesotho, Swaziland, and Namibia to join the group as Cotton Mather If Lula is able to convince the rest of Mercosur and potentially all of South America, the customs union will have an enormous impact on global trade.

The treaty is not all about economics though. Brazilian President Lula and Indian Prime Minister Manmohan Singh both commented on the political potential of the group to spur deep UN reforms, including the addition of their nations as permanent members of the UN Security Council.

"Let us join our voices to support UN reform," said President Lula, "The issue has been debated long enough; the time has come to make decisions." The president warned that without structural reforms the UN risks losing global credibility.

The leaders also discussed the potential for IBSA to become a voice for other developing nations of the "South" against the industrialized nations of the "north."

"These cooperation agreements have an impact on the populations of the world's poorest countries," said Lula, "this will not only benefit our countries, it will benefit all of humanity."

What the announcement means for the Union of South American Nations (Unasur) is unclear. It could be that Brazil is growing impatient with the slow progress of the new union. The issues discussed today in South Africa are the same as those discussed at the Brazilian sponsored South American Reunion of Presidents in 2000.

Brazil's focus on changing developed nation's farm subsidies and the international status quo has driven its interests within South America over the last decade, but with little or no progress on the regional front, Brazil seems to be seeking out more serious partners abroad.

The announcement also complicates ongoing negotiations within the region by adding complexity to an already difficult issue. CAN member countries like Ecuador, Bolivia, and Peru are hesitant about FTAs with the larger Mercosur. Opening up the group to emerging global powers like India and South Africa could set the regional process back.

Whatever the case, the proposed treaty is yet another example of the changing global landscape. With just a little imagination one can picture a future world where current economic powers like the U.S. and E.U. are forced to make tough concessions on national subsidies if they want to continue tapping the reserves of developing nations. Oh, the great age of global decentralization has arrived.

Nathan Gill is the editor of Southern Affairs, an online magazine offering news and analysis of political events in South America.

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