Brazil Korea Free Trade Agreement

Mercosur, which recently began a dialogue to explore the possibility of a free trade agreement with Singapore, is also aiming to negotiate a similar agreement with Japan, Asia`s second-largest economy and the world`s third largest, Brazilian Foreign Minister Aloysio Nunes Ferreira said during a visit to Tokyo last week. Mercosur is formally a customs union. While a free trade agreement implies an obligation between countries to respect lower tariffs and other trade rules that provide preferential market access, a customs union adds a common external tariff on imports into the bloc and a commitment by its four members to negotiate trade agreements with third countries. In theory, this means that each country enjoys preferential access to other members` markets and stronger negotiating power in trade agreements, not unlike the members of the European Union. In practice, intra-community trade is inherent in bureaucracy, non-tariff barriers and agreements on private trade restrictions. Very few external negotiations have been concluded, so Mercosur is the most closed region in the world, with an average tariff of more than 12%. The only comprehensive free trade agreements signed by Mercosur since its inception in 1994 were with Egypt and Israel, and all Mercosur trade agreements cover less than 10% (calculations based on World Bank global development indicators) of global GDP. South Korea and Mercosur agreed on Friday at a meeting between the local government and representatives of the four countries that make up the South American trade bloc to begin formal negotiations for a bilateral free trade agreement. A leaflet photo provided by the South Korean Ministry of Commerce shows Kim Hyun-chong, South Korean Trade Minister, during a ceremony at a hotel in Seoul, South Korea, on May 25, 2018, to begin formal negotiations with four countries in the South American trade bloc: Brazil, Argentina, Paraguay and Uruguay, to reach a trade agreement in the second half of the year.

EPA-EFE/SOUTH KOREAN TRADE MINISTRY HANDOUT SOUTH KOREA HANDOUT EDITORIAL USE only/NO SALES Combined trade between the two parties reached $10.8 billion in 2019, an increase of 5.6% over the previous year. South Korea`s foreign shipments to the region amounted to $5.3 billion, down 0.1 percent over that period. “Strengthening relations through increased trade and investment flows is an expression of our shared interest in prosperity and our shared commitment to trade liberalization and open markets,” he added. At the end of April, Argentina announced to its Mercosur partners, Brazil, Paraguay and Uruguay, that they would withdraw from trade negotiations already concluded with the European Union and the European Free Trade Association. This unilateral decision caused shockwaves on the part of Mercosur, as it implied a possible dissolution of the trading bloc. However, Argentina`s decision was later overturned and Mercosur`s partners are now considering how they can make progress despite each country`s competing priorities. Although Brazil, Uruguay and Paraguay are interested in new trade agreements with other countries such as Canada, South Korea and Singapore, the von Fernandez government has reversed Argentina`s liberal stance and does not support the idea of new trade agreements. On May 25, 2018, MERCOSUR and South Korea began trade talks in Seoul, Korea. The first round of negotiations took place from 11 to 14 September 2018 in Montevideo, Uruguay. The second round of negotiations ended on 6 April 2019 in Seoul.

The third round took place from July 8 to 12, 2019 in Montevideo, Uruguay. The fourth round of negotiations ended on 4 October 2019 in Busan, Korea. The fifth round of negotiations took place in Montevideo, Uruguay, from 10 to 14 February 2020. On 3 March 2020, MERCOSUR and Korea met in Seoul to discuss the progress of negotiations for the signing of a MERCOSUR-Korea trade agreement.