Minister for industry and trade, Mounir Fakhry Abdel Nour, said this month the government had started negotiations with Brazil, one of the five full members of the Mercosur trade-bloc, along with Argentina, Paraguay, Uruguay and Venezuela. If negotiations are successful, the trade deal may come into force before the end of 2015.
Food tariffs cut
The Mercosur trade deal is of particular significance to the food sector, as it will cut Egyptian tariffs on products such as meat, sugar and edible oils imported from the five countries covered by the agreement. In exchange, around 47% of Egyptian exports will be exempt from tariffs.
“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,” said an Egyptian government briefing on the deal.
“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 added.
Booming agribusiness trade
Egypt and the Mercosur countries started negotiating the deal in 2004, and reached an agreement in 2010. Egypt ratified the agreement in 2013, paving the way for it to become the first Middle Eastern country to complete a free trade deal with Mercosur.
Trade between Egypt and some South American countries is already brisk, even without the benefits of the free trade agreement. Last month Egypt imported US$196m-worth of agribusiness products from Brazil, up 114% year-on-year, and behind only Saudi Arabia, on US$208m.
In the first half of 2015, Egypt imported Brazilian beef worth US$308.6m, 25% more than in the same period the year before, making it the leading Arab buyer. In May alone, Egyptian importers bought US$66.8m-worth of beef from Brazil, almost double the amount in May 2014, partly as a result of Ramadan stockpiling.