Brazil considers lower tariffs for SA exporters

| Friday July 16, 2010 00:00

South African companies that export to Brazil would benefit substantially if tariff rates were reduced, especially as Brazil is a gateway to other Latin American economies.

Brazil committed itself at the SA-Brazil Business Forum last week to buy more goods in SA to end the trade imbalance by this year.

This is the first step by the biggest South American economy to address its trade imbalance with SA.Figures from the South African Department of Trade and Industry show that two-way trade between the countries rose from R10bn in 2005 to R19bn last year.

SA's top five product sectors for exports to Brazil were base metals (19%), mineral products (16%), machinery (9%), chemical products (5%) and plastic products (4%), Willemien Denner, a researcher at trade think-tank Tralac, said last year in a research paper. The top 10 South African products exported to Brazil represented 64% of SA's exports to that country.

SA's imports from Brazil include chemicals, vehicles, machinery, ceramics, iron and steel, and Brazil charges between 10% and 12% on any goods exported to SA.

Ivan Ramalho, Brazils's vice-minister of development industry and foreign trade, said last week that he had noted SA's business concerns about the high tariffs that had to be paid on goods and services.He told delegates at the SA-Brazil Business Forum that Brazil did not charge high tariffs compared with other countries.Brazil had increased its imports by 70% in the first quarter of this year, he said. This indicated 'extraordinary growth' in its economy.

Ramalho urged SA to speed up the process of signing the Mercosur agreement, as this would solve the tariff barriers between the two nations. Mercosur is a regional trade agreement between South America's largest economies, Argentina, Brazil, Paraguay and Uruguay, which together have an estimated population of 242-million.

The main purpose of this pact is to foster regional economic integration within this bloc.Israel is the only non-South American signatory, according to Wikipedia.

Trade and Industry Minister Rob Davies said that last month Parliament had ratified the Mercosur agreement. Ratification is the first step towards signing an agreement so it becomes a legal document.Davies said SA would sign the agreement after the necessary consultation processes ended.

SA intends to sign the Mercosur agreement through the Southern African Customs Union.

'SA and Brazil have created a mechanism to monitor bilateral trade between the two countries,' Ramalho said.SA's second industrial policy document had been modelled on aspects of the Brazilian experience, Davies told the business delegates.

A bilateral agreement to deepen economic and commercial links was also concluded last week between the two countries, the biggest economies in their respective regions. (Business Day)