Mercosur trade pact expected by end of year

Despite recent setbacks, the free-trade agreement in the works between Israel and South America's Mercosur (Mercado Comun del Sur) trade block is expected to be signed by the end of the year. "Negotiations have progressed at a very fast pace, and we are very close to an agreement," Merav Gonen, director for bilateral agreements at the Industry, Trade and Labor Ministry told The Jerusalem Post. "Mercosur contacts have expressed their commitment to continue the negotiations at the pace they were going." Since February, the agreement has been the subject of four rounds of negotiations held every two months, but the upcoming meeting, which had been scheduled to take place here next week, has been postponed, and no new date has been set, Gonen said. The last round of talks was held in Argentina in early July. While recognizing that political complications resulting from the recent conflagrations in Gaza and Lebanon may have some influence on the slowdown, Gonen stressed that the problem was essentially technical. Argentina ended its presidency of Mercosur at the end of July, replaced by Brazil, necessitating the appointment of new head negotiators of six or seven teams on the Mercosur side, she said. Venezuela's admission to the trade block in July as a full member, joining Brazil, Argentina, Uruguay and Paraguay, was also not the reason for the delays,she said. The adhesion of Venezuela still requires the approval of the other four countries, and Caracas would only have observer status at the talks once they resume, she said. Venezuelan President Hugo Chavez has compared Israel's attacks on Hizbullah to the Holocaust, among other statements aligning his country with Syria and Iran. Negotiations with Mercosur are on "purely economic topics" and have no relation to geopolitics, Gonen stressed, adding that she has been told by Mercosur sources that "until now [the Venezuelans] have not expressed interest in the pact." Industrial exports to Latin American (excluding diamonds) are expected to grow 3 percent to about $1.4 billion by the end of 2006 , despite standing still in the first half of the year, the Israel Export Institute said this week. With the anticipated signing of a free-trade agreement with Mercosur, exports to the region are expected to grow 40% in 2007-2010, the institute added. In the first half of 2006, industrial exports to Latin America came to about $600 million, the same amount as the first half of 2005.