The trade deal is likely to be concluded with the fifth round of negotiations at the sidelines of Mercosur summit in Buenos Aires at the end of this month which the Trade Minister of Egypt Rachid Mohamed Rachid would be participating. The Mercosur is a free trade region of South America comprising of Brazil, Argentina, Uruguay and Paraguay.

A reliable source from the Egyptian Ministry of Trade and Industry is reported to have informed the Egyptian daily that it had agreed with Mercosur to implement the deal in a phased manner by setting up five categories for specific commodities and products.

The first category, which includes intermediate goods and raw materials, will be tariff-free from the effective date of the FTA. The second group’s duties will be removed over a period of four years, the third one’s over eight years, and the fourth over ten years. However, the time period for the fifth category has yet to be worked out as it includes highly sensitive products, and feared to negatively affect the local businesses.

Egypt is understood to have requested Mercosur to include textiles, clothes, construction materials, and engineering and chemical products among the first category. Egypt’s main exports are petroleum, aluminium, raw cotton and leather, whereas it mainly imports poultry, oils, sugar, soya beans and meat. Once the accord is signed, it will become the second FTA that the Mercosur is signing with a non-Latin American nation after Israel.

Last month, Evandro Didonet, the head of the Department of Foreign Negotiations at the Brazilian foreign office (Itamaraty) observed that the FTA with Egypt was “of the greatest importance”, as Egypt was one of the countries with the greatest weight in the Arab world. In his evaluation, it should grant “great visibility” to the South American bloc and open a “gateway” into the Middle East and North Africa.

Toboc Trade News

Whether the EU saves itself from present crisis or not, there are many things to be absorbed by the new unions in the making much before taking the plunge. Primarily the alert system, deliberated by the EU to give powers to the parent body to ‘semi-audit’ tasks to monitor budget discipline not only of national governments but also of regional and local bodies, would ensure better transparency. This could prevent governments from hiding grey areas of decentralised budget appropriations, which was partly the case with Greece that stands accused of having lied about its accounts for years.

Besides, periodical evaluation of state affairs including politics based on ground realities and pre-set stitch in time solutions should be in place to ward off the dangers of any of the member-state getting weakened beyond manageable proportions. Projections and goals have to be marked by success failing which should attract stringent punitive measures; something that Brussels is planning to impose on members whose public debt is running out of control.

Furthermore, the member-states should make constant efforts to bring down their debts, which have been proven possible by countries like Belgium and the UK in the past. Before the global meltdown, Belgium managed to reduce its debt to 84.2 percent of GDP in 2007, down from a peak of more than 130 percent in the early 1990s. Likewise, the UK had a debt peak of 300 percent of its GDP after the Second World War, which had been gradually reduced to 33 percent by 1990.

There is also much to be imbibed from the off-target response such as ‘Europe 2020′, which is looked at sceptically by the Eastern EU members and criticized by German Chancellor Angela Merkel for contrasting reasons. The objectives of ‘Europe 2020′ include fight against poverty, increase in education and employment rate.

The proposal unveiled by the European Commission in March highlighted on poverty alleviation calling for reduction in the number of Europeans living below the poverty line by 25 percent, lifting 20mn out of poverty from the current 80mn. However, such policies with progressive milestones should be included right from the beginning and should be modified time to time with ‘proper’ budgetary allocation.

The EU’s new strategy for sustainable growth and jobs, ‘Europe 2020′, comes in the midst of the worst economic crisis in decades. The new strategy replaces the Lisbon Agenda, adopted in 2000, which largely failed to turn the EU into “the world’s most dynamic knowledge-based economy by 2010.” Nonetheless, the new proposal puts innovation and green growth at the heart of its blueprint for competitiveness and proposes tighter monitoring of national reform programmes, one of the greatest weaknesses of the Lisbon Strategy.

Toboc Trade News

Consequently, several Latin American and Asian countries will be importing more rice to offset the resulting shortage. The South American countries such as Brazil, Venezuela, Columbia and Panama and the Asian countries like India and the Philippines are understood to have increased their import quotas as El Nino effect is likely to last till June.

The US Rice Producers Association President Dwight Roberts told Bloomberg that Brazil may start buying this month, a total of 1mn metric tons throughout the year, direct fallout of El Nino. In another statement, the Agriculture Undersecretary of the Philippines Bernardo Fondevilla said his country, the world’s biggest rice buyer could lose more than 0.8mn tons of paddy rice, from a severe dry spell caused by El Nino triggering renewed rice imports.

Brazil would be importing from Vietnam, the largest rice exporter behind Thailand after the latter fulfills its November and December tenders from the Philippines. As per the Philippines National Food Authority figures, the delivery of four tender amounting to 2.25mn tons mostly from Vietnam would start from January to June.

The Filipino government has set aside about $37mn to mitigate the impact of El Nino on crop and fishery production this year. The phenomenon is expected to devastate 453,204 hectares of rice, 227,843 hectares of corn fields and 14,160 hectares of the fishery industry in the Philippines alone.

Robert on a rice update to Bloomberg informed that Iraq, the fifth largest rice importer, might buy at least 120,000 tons by next week. El Nino effect is likely to peak this month causing speculative buying in the global rice market.

Robert told that the apparent decline in Mercosur production and increased demand in the South American and other Central American countries, supplies will be tight and some markets could pay considerably higher prices for imported rice. The data on rice stockpiles and production trickling in from almost all regions across the globe indicate world rice market is in for severe price rice which in a worst case scenario could even reach the all time high of 2008.

Toboc Trade News