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French Version

It's a deal : South American-Arab summit results in free-trade negotiations

Businessmen describe the two regions as being highly complementary

Uruguay wants to sell more rice to Arabs. Bolivia wants oil money to fund its tin mines. Brazil hopes to revive a defense industry that was once a major supplier of arms to the Middle East.

As leaders from South America and the Arab world rounded up meetings in the Brazilian capital during a two-day summit to boost political and economic ties, many business executives on the sidelines were trying to strike deals between two regions they said were highly complementary.

Their efforts at a parallel investors conference got a boost when ministers announced negotiations on a free-trade area between six Arab Gulf nations, many of them rich in oil, and a South American economic bloc that includes the continent's two largest economies.

The trade zone would link nations of the Gulf Cooperation Council - Saudi Arabia, the United Arab Emirates, Oman, Bahrain, Kuwait and Qatar - with the Mercosur bloc, whose full-fledged members are Argentina, Brazil, Paraguay and Uruguay.

Abdel-Rahman al-Attiyah, secretary general of the GCC, did not outline a timeline for the negotiations, but said clinching a deal "will not take long, because the common interest is there."

Business leaders trolling the vast convention center for possible deals agreed.

Eduardo Gomez, CEO of a Uruguayan high-tech consulting firm, said the two regions would make good partners.

"They have the petrodollars and they want to go to the American markets, but they don't have the products," he said.

Representatives of Latin American countries were trying to educate Arab business leaders about their markets.

Gomez said he doubted many Arab businessmen knew that Uruguay is Latin America's top software exporter, aiming to reach export sales of $400 million this year, mostly to China and Latin America.

A few steps away at a stand promoting Bolivia, government officials offered a workshop to let the Arabs know that the troubled Andean country is looking for investments to improve its crumbling infrastructure, build mines and cut forests for furniture-quality wood.

"We want to make a big push to open up new markets and attract new investment," said Isaac Maidana, the country's vice minister for international relations. "We've never had a tight relationship with the Arabs before, but these areas could be of big interest."

Brazil was pushing its defense industry, which in the 1980s was the world's eighth-largest based on strong demand for Brazilian armored personnel carriers, reconnaissance and anti-aircraft vehicles, troop carriers and rocket launchers.

Business fell off with the end of the cold war, but officials said they were talking with possible Arab clients about resuming the relationship with sales of nonlethal weapons like tear gas and rubber bullets.

Going a step further and shipping lethal weapons to the Middle East "would be a very political and very delicate issue" and could face stiff U.S. opposition, said Joelcio Silveira, a retired general and director of Brazil's Association of Defense Industries.

Attiyah said the two regions are a natural fit because millions of people of Arab descent already live in South America.

Luiz Furlan, Brazil's minister of industry and development, acknowledged that trade is paltry between the two regions. But he said there are strong indications it will grow rapidly.

Brazil, South America's largest economy, exports just $4 billion a year to Arab countries, and imports $4.1 billion, mostly in oil.

But Brazil's exports to the region have risen 50 percent over the last several years, and overall two-way trade of $8.1 billion could nearly double to $15 billion within three years, Furlan said.

"Today we are beginning a new stage ... in the relations of South America and the Arab world," he said.

Miguel Blanco, chief executive of Saman, Uruguay's biggest rice processor, looked at Arab countries' population growth and saw things even more simply.

"Wherever there are people, there are possibilities," he said. "We're looking to open up new markets."

Pushing a goal he has pursued since becoming Brazil's first elected leftist leader, Brazilian President Luiz Inacio Lula da Silva urged participants to fight for free-trade rules that help the developing world's masses who live in misery, instead of benefiting only rich countries and multinational corporations.

Silva, singled out for criticism agricultural subsidies for U.S. and European farmers, saying they must be slashed to ensure that "poor countries receive the benefits of globalization."

"We want to take concrete and lasting steps in the struggle for development and social justice," Silva said.

Guyanese President Bharrat Jagdeo said ongoing trade liberalization talks by the 148-nation World Trade Organization will not succeed unless they lift living standards in poor countries.

The WTO, currently in the midst of a leadership race, must be headed by a citizen of a developing country and a new world economic order is needed to solve the problems of developing nations, he said.

"We have economic systems that have kept us on the periphery," said Jagdeo. "We will forever remain on the periphery if we don't change the system."

Arab League Secretary General Amr Moussa said South America and the Arab League countries, with more than half a billion people, lie far apart but share strong cultural links that should lead to closer cooperation. About 10 million South Americans are of Arab descent.

More than 600 million people are looking with hope to the summit of hope, the Brasilia summit," he said.

Beirut,05 16 2005
The Daily Star
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