Brazil: Another lopsided trading relationship?
Stabroek News
June 18, 2004
Guyana has exported some 3,000 tonnes of rice to Brazil under the Guyana/Partial Scope agreement, which took effect in March.
But Guyana's exports are still minimal, amounting to US$25,000 to date while Brazil's imports to Guyana stand at US$10M so far under the agreement, says Brazil's Ambassador to Guyana, Ney do Prado Dieguez.
Minister of Foreign Trade and International Co-operation, Clement Rohee and Dieguez say the agreement is in full effect but, according to Dieguez, Guyana has not really begun to export to Brazil.
Executive Director of the Private Sector Commission (PSC), Bal Persaud told Stabroek Business that because of the current imbalance in trade and the fact that a new market has been created for Guyana, the PSC, the Guyana Manufacturers' Association and the country's chambers of commerce were due to meet later this week to discuss ways and means of taking advantage of the facility.
Persaud noted that there is a fair amount of 'suitcase' trade going on between Guyana and Brazil in such items as haberdashery, shoes, kitchen and household utensils.
He says the Ministry of Foreign Trade and International Co-operation needs to resuscitate the broad-based committee of governmental and non-governmental organisations to look and monitor such developments as the construction of the now stalled Takutu bridge and the Lethem trail.
The local business community was also looking at taking part in the South American exporters meeting and exhibition in Sao Paolo, Brazil, on June 23 and 24. They were eager to do business in Brazil, Persaud stressed.
The business community was briefed on the exhibition at a seminar last week when a delegation from Brazil visited Guyana as part of the G-90 meeting. Stabroek Business understands that about 50 persons from the local business community took part in the seminar.
Apart from an annual quota of 10,000 tonnes of duty-free rice, Guyana also has an annual duty-free 10,000 tonnes of sugar under the agreement.
Brazil has also waived duty for some 100 tonnes of red pepper, fresh fruits, vegetables, bottled rum, calcined bauxite, plywood, wooden furniture, sawn lumber, PVC pipes, heart of palm, corrugated cardboard, paper towels, chemical paper and aluminium zinc sheets.
Guyana in turn grants Brazil duty-free access on a number of specified imports such as capital goods, machinery and spares, steel rods and other building materials, along with a 50% reduction of duties on other products including a range of industrial equipment, medicines and new tyres.
The agreement also provides for the abolition of the Merchant Marine Renewal Tax, a 25% levy on ocean freight on imports from Guyana into north-eastern Brazil.
The Partial Scope agreement was signed between Guyana and Brazil in June 2001 but did not come into effect until March this year because of objections on the part of some Caricom member states most notably Barbados and St Lucia. There were some 800 concessions granted for Brazil from car parts to ham shoulders most of which are allowed in 100% duty-free. A number of these products are on the List of Items ineligible for duty exemption under Caricom rules. This category applies to products which can be supplied in the most part (70%) by local producers. Furthermore some of the exemptions on the Partial Scope jeopardised Caricom's own trade agreements with the Dominican Republic and Cuba. After some haggling certain items were struck off. These include varnishes and paints based on vinyl and polyester (15% CET); coffee affecting a trade agreement with the Dominican Republic; aerated and mineral drinks described as sensitive to member states; lubricating oils and hydraulic brake fluid (CET 20%); shampoos, perfumes and toiletries; camel back for retreading tyres; flat rolled steel products, bars and rods ; plastics used in construction; barbed wire; oil and petrol filters; and a number of categories of textiles and clothing including the quaintly named petticoats.
There has been considerable debate for a number of years over member states signing trade agreements with countries outside of Caricom. Some have argued that such bilateral agreements undermine the principles of a common market while other countries claim their right as a sovereign state.
Rohee noted that following the objections, the text of the agreement was sent to all member states and no discrepancy was found.
As far as Guyana was concerned all the relevant procedures to facilitate implementation of the agreement have been completed, he said.
The agreement, which will run for two years initially, may be extended by mutual consent or alternatively may be replaced by an agreement of economic complementation between Guyana and Mercosur or Brazil and Caricom.