BRASILIA — Brazil has officially begun negotiating a trade agreement with the United States, the South American country’s economy minister said on Wednesday, adding that the negotiations were compatible with a trade deal recently struck with the European Union.

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Brazilian Economy Minister Paulo Guedes said the United States wants closer ties with Brazil, including the chance to sell Latin America’s largest economy more ethanol. (Reporting by Anthony Boadle Writing by Gabriel Stargardter; Editing by David Gregorio) </s> U.S. Commerce Secretary Wilbur Ross arrives to a meeting with Brazil's Economy Minister Paulo Guedes (not pictured) at the Ministry of Economy building in Brasilia

BRASILIA (Reuters) - Brazil has begun negotiating a trade agreement with the United States, the South American country's economy minister said on Wednesday, kicking off knotty talks between longstanding competitors whose leaders want closer commercial ties.

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America's largest economy more goods, including ethanol.

Brazil and the United States compete in key areas like agriculture, making it likely the trade talks will be fraught and long-lasting. Brazil is also part of South America's Mercosur customs union, which would have to be involved in any tariff reductions.

Yet far-right President Jair Bolsonaro, along with Guedes and his team, have pledged to bring down trade barriers, open up the economy and make Brazilian business more competitive.

Since his election last year, Bolsonaro has sought to build close ties with U.S. leader Donald Trump, an ideological ally who favors bilateral commercial pacts over multilateral deals.

After meeting with Ross, Bolsonaro echoed his concerns over potential "pitfalls" in a trade deal recently struck between the European Union and the Mercosur bloc that includes Argentina, Uruguay and Paraguay.

On Tuesday, Ross said the trade deal between Mercosur and the European Union, reached in principle last month, should avoid "poison pills" that would obstruct a possible U.S. accord.

Marcos Troyjo, Brazil's deputy economy minister for foreign trade, said it would be possible to negotiate a trade accord with the United States that does not include changes to tariffs, adding that negotiations will begin with non-tariff areas.

Brazil is considering renewing in September a zero-tariff quota for 600,000 tonnes of ethanol imports per year that has been filled almost entirely by U.S. supplies, Troyjo said.

Brazil is also committed to establishing an import quota for 750,000 tonnes of U.S. wheat a year without tariffs, he said.

Ross on Tuesday reaffirmed U.S. support for Brazil to join the Paris-based Organisation for Economic Cooperation and Development, a club of the world's leading market economies. Membership in the OECD would give Brazil a seal of approval that many institutional investors need to invest in the country, Troyjo said. </s> BRASILIA, July 31 (Reuters) - Brazil has officially begun negotiating a trade agreement with the United States, the South American country's economy minister said on Wednesday, adding that the negotiations were compatible with a trade deal recently struck with the European Union.

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Brazilian Economy Minister Paulo Guedes said the United States wants closer ties with Brazil, including the chance to sell Latin America's largest economy more ethanol. (Reporting by Anthony Boadle Writing by Gabriel Stargardter; Editing by David Gregorio) </s> BRASILIA (Reuters) - Brazil has begun negotiating a trade agreement with the United States, the South American country’s economy minister said on Wednesday, kicking off knotty talks between longstanding competitors whose leaders want closer commercial ties.

U.S. Commerce Secretary Wilbur Ross arrives to a meeting with Brazil's Economy Minister Paulo Guedes (not pictured) at the Ministry of Economy building in Brasilia, Brazil July 31, 2019. REUTERS/Adriano Machado

Speaking in Brasilia after meeting with U.S. Commerce Secretary Wilbur Ross, Economy Minister Paulo Guedes said the United States was eager for a deal and the chance to sell Latin America’s largest economy more goods, including ethanol.

Brazil and the United States compete in key areas like agriculture, making it likely the trade talks will be fraught and long-lasting. Brazil is also part of South America’s Mercosur customs union, which would have to be involved in any tariff reductions.

Yet far-right President Jair Bolsonaro, along with Guedes and his team, have pledged to bring down trade barriers, open up the economy and make Brazilian business more competitive.

Since his election last year, Bolsonaro has sought to build close ties with U.S. leader Donald Trump, an ideological ally who favors bilateral commercial pacts over multilateral deals.

After meeting with Ross, Bolsonaro echoed his concerns over potential “pitfalls” in a trade deal recently struck between the European Union and the Mercosur bloc that includes Argentina, Uruguay and Paraguay.

On Tuesday, Ross said the trade deal between Mercosur and the European Union, reached in principle last month, should avoid “poison pills” that would obstruct a possible U.S. accord.

Marcos Troyjo, Brazil’s deputy economy minister for foreign trade, said it would be possible to negotiate a trade accord with the United States that does not include changes to tariffs, adding that negotiations will begin with non-tariff areas.

Brazil is considering renewing in September a zero-tariff quota for 600,000 tonnes of ethanol imports per year that has been filled almost entirely by U.S. supplies, Troyjo said.

Brazil is also committed to establishing an import quota for 750,000 tonnes of U.S. wheat a year without tariffs, he said.

Ross on Tuesday reaffirmed U.S. support for Brazil to join the Paris-based Organisation for Economic Cooperation and Development, a club of the world’s leading market economies. Membership in the OECD would give Brazil a seal of approval that many institutional investors need to invest in the country, Troyjo said. </s> President Donald Trump on Tuesday said his administration is working on a free-trade agreement with Brazil, to cement closer ties between the two largest economies in the western hemisphere.

[WASHINGTON] President Donald Trump on Tuesday said his administration is working on a free-trade agreement with Brazil, to cement closer ties between the two largest economies in the western hemisphere.

"We are going to work on a free-trade agreement with Brazil. Brazil is a big trading partner. Other than that, we love the relationship," Mr Trump told reporters at the White House.

Brazilian President Jair Bolsonaro is scheduled to host US Commerce Secretary Wilbur Ross in Brasilia on Wednesday.

"I have a great relationship with Brazil. I have a fantastic relationship with your president," Mr Trump said of the Brazilian leader, adding: "They call him the Trump of Brazil. I like that."

Far-right Bolsonaro is part of a populist wave that has swept the Americas and Europe in recent years, making him a kindred spirit with Trump.

With about US$70 billion in two-way annual goods exchanges between the two nations, the United States typically enjoys a robust trade surplus with Brazil.

Major US exports include agriculture goods such as wheat and animal feeds as well as information and telecommunications services.

Imports include aircraft, fuels, coffee and meat as well as iron and steel.

In 2011, the two countries signed an agreement on trade and economic cooperation to ease commercial exchanges.

But Mr Ross played down expectations for an agreement to be reached quickly.

Speaking to reporters in Sao Paulo, he also warned that a recent trade pact between the European Union and Mercosur countries - Brazil, Argentina, Paraguay and Uruguay - should not contain anything that would block a deal with the US.

Brazil's deputy economy minister Marcos Troyjo told AFP a bilateral agreement with the US would be possible if it did not involve tariffs.

Otherwise, it would be necessary to involve its Mercosur partners in the negotiations. </s> Here is all you need to know about the blockbuster EU-Mercosur trade deal

In this July 14, 2017 file photo, Argentina's Foreign Minister Jorge Faurie attends a meeting at the Itamaraty Palace, in Brasilia, Brazil. The Argentine Foreign Ministry said in a statement on Friday, June 28, 2019, that South America’s Mercosur trade bloc has struck a “strategic association” trade deal with the European Union, clinched in the Belgian capital of Brussels following two decades of negotiations. The Mercosur bloc includes Argentina, Brazil, Paraguay and Uruguay. Image Credit: AP

Also in this package Canada takes a first step toward ratifying trade deal with US, Mexico

Europe and South America's leading customs union struck a free-trade deal after 20 years of talks, notching up a major win in a global market-opening drive that counters the protectionism of US President Donald Trump.

Top European Union officials reached a breakthrough in free-trade negotiations with counterparts from the Mercosur group of Argentina, Brazil, Paraguay and Uruguay, paving the way for an agreement to expand goods shipments worth almost 90 billion euros ($102 billion) a year. The pact is slated to be among the EU's biggest.

Both sides settled longstanding differences over Mercosur demands for greater access to the EU agricultural market, including for beef and sugar, and European calls for South America to lower automotive-import barriers.

Bringing to an end two decades of talks, the deal struck on Friday in Brussels follows groundbreaking European free-trade accords with Canada and Japan and adds political momentum to EU negotiations with Australia and New Zealand. It comes as government heads from the Group of 20 leading economies meet in Japan with the focus on Trump's trade war with China and planned meeting on Saturday with his Chinese counterpart.

Europe is fighting to uphold a 70-year-old global commercial order threatened by Trump's "America First" agenda, which has sparked US tariff battles against strategic allies and rivals alike, rattled the foundations of the World Trade Organization and darkened the economic outlook.

The EU, the world's largest trading bloc with more than 500 million consumers, is also seeking to underscore its commercial clout as the UK prepares to leave by October 31. While Brexit will force Britain to take charge of its own trade policy for the first time in almost 50 years, the country hopes to piggyback on the market-opening pacts already struck by the EU.

Latin Celebrations

The deal is the largest and most complex ever struck by Mercosur and South American governments were quick to celebrate its signing.

"Together, Mercosur and the EU represent a quarter of the global economy and now Brazilian producers will have access to this enormous market," Brazilian President Jair Bolsonaro wrote on Twitter. "Great day!"

A press statement released by the Brazilian economy ministry said that the deal would result in an increase in GDP of $87.5 billion over the next 15 years, a number that could rise to $125 billion.

'The Mercosur-EU deal is much more than a trade agreement,' said Argentine Foreign Affairs Minister Jorge Faurie. 'It's a strategic advance in Argentina's position on the global stage that strengthens the commercial agenda of both our country and our bloc.'

Key facts about the blockbuster EU-Mercosur trade deal

Taking into account the GDP of all the countries concerned, the agreement concluded by the EU in 2018 with Japan is slightly larger (19.5 trillion euros) than that with Mercosur (18 trillion euros).

But in terms of population, the EU-Mercosur agreement is bigger, involving 770 million people, ahead of the EU-Japan's deal covering 630 million.

The EU and Mercosur exchange 88 billion euros in goods annually, with a balance very slightly in favour of the Europeans (+2.5 billion euros).

These exchanges place Mercosur between India and Canada, in 10th place among the EU's main trading partners.

But the trade remains modest compared with the 675 billion euros exchanged each year by Europeans with the United States, their main partner.

The EU is Mercosur's largest trading partner after China.

Advantages

The agreement is set to eliminate South American tariffs against the EU that are still very high in some key industrial sectors: 35 percent in the clothing and automotive sector - which are at the heart of the agreement - or 14 percent in the pharmaceutical industry.

In agriculture, these customs duties are now high for spirits (35 percent), dairy products (28 percent), chocolate (20 percent) or wine (20 percent).

The agreement also aims to protect European geographical indications on products such as Cognac or Manchego cheese. These goods often exist in the Americas because of historical links between the two regions.

The EU is also counting on the agreement to improve access to the South American market for services (telecommunications, transport or financial services).

EU concessions

The EU will have to open its market to beef, ethanol, sugar and poultry exports from the Mercosur nations - these are all crucial sectors for the South Americans, but also very sensitive for European producers who have strongly opposed the trade deal.

To protect its market, the EU is setting up quotas: politically sensitive imports will not be taxed when they arrive in Europe up to a certain threshold, above which customs duties will again be applied.

These quota thresholds were also imposed on Canada and Japan.

Environment

Like all the agreements recently signed by the EU, this one includes a chapter on sustainable development.

According to the commission, this chapter will cover areas such as "forest conservation, wildlife trade and respect for workers' rights".

Despite these non-binding commitments, several NGOs have expressed concern, particularly because of the "ecological situation in Brazil" since the inauguration in January of far-right President Jair Bolsonaro.

Bolsonaro is pursuing a policy that favours agribusiness, a major business in his country's economy, but which, according to activists is destroying the Amazonian forest.

Unknowns

The agreement negotiated by the commission with Mercosur must now be approved by all 28 member states, which is not an easy task in Europe, where public opinion increasingly questions the benefits of free trade and its impact on the climate, even in traditionally trade-friendly countries.

In 2016, Belgium alone almost ruined the signing of the highly controversial CETA trade agreement with Canada. But the desire to make the EU a champion of free trade against US President Donald Trump-led protectionism could work in favour of the deal. </s> "We're going to work on a free trade agreement with Brazil," Trump told reporters at the White House, without giving details.

Trump raised the possibility of a trade deal as U.S. Commerce Secretary Wilbur Ross visited Sao Paulo to address business leaders ahead of a Wednesday meeting with Bolsonaro in Brasilia.

The United States and Brazil, which exchanged more than $100 billion in goods and services last year, have drawn closer since Bolsonaro took office in January following the far-right former army captain's insurgent election campaign modeled after Trump's. He has tapped his son Eduardo Bolsonaro as ambassador in Washington.

"Brazil is a big trading partner. They charge us a lot of tariffs, but other than that we love the relationship," Trump told reporters, citing what he called his great relationship with Brazil and praising Bolsonaro.

Marcos Troyjo, Brazil's deputy economy minister for foreign trade, told Reuters his country has "ambitious" goals to facilitate trade and boost investment between the two countries, especially in infrastructure.

But Troyjo said any talks on tariffs would have to include Brazil's partners in the South American customs union Mercosur, which includes neighbors Argentina, Uruguay and Paraguay.

The powerhouse farm sectors in Brazil and the United States have occasionally found themselves at odds, including a dispute over cotton subsidies resolved at the World Trade Organization in 2014.

The United States threatened steel and aluminum tariffs on Brazil and a number of other countries last year as part of Trump's "America First" agenda, before granting a permanent exemption to Brazil.

Ross is the first U.S. commerce secretary to visit Brazil since 2011. On Wednesday, he will meet with Bolsonaro and hold talks with Brazil's economy and infrastructure ministers, Paulo Guedes and Tarcisio Freitas. </s> FILE – In this July 14, 2017 file photo, Argentina’s Foreign Minister Jorge Faurie attends a meeting at the Itamaraty Palace, in Brasilia, Brazil. The Argentine Foreign Ministry said in a statement Friday, June 28, 2019, that South America’s Mercosur trade bloc has struck a “strategic association” trade deal with the European Union, clinched in the Belgian capital of Brussels following two decades of negotiations. The Mercosur bloc includes Argentina, Brazil, Paraguay and Uruguay. (AP Photo/Eraldo Peres, File)

BUENOS AIRES, Argentina (AP) — South America’s Mercosur bloc and the European Union struck a free-trade deal Friday after two decades of negotiations that concluded amid global trade tensions and rising protectionism.

The agreement announced by both sides came as trade talks between the EU and the United States have stalled with the Trump administration threatening to impose tariffs on all autos, a major European export to the U.S.

“In the midst of international trade tensions, we are sending today a strong signal with our Mercosur partners that we stand for rules-based trade,” European Commission President Jean-Claude Juncker said following the clinching of the deal in the Belgian capital of Brussels.

Juncker described the pact with the bloc made up of Argentina, Brazil, Paraguay and Uruguay as “an historic moment” that came 20 years after talks were launched. It shows the European bloc is determined to remain a flag-bearer of the global trade system at a time when it is being challenged by a Trump administration skeptical of free trade.

Argentina’s Foreign Ministry said the agreement “will mean the integration of a market of some 800 million people, nearly a fourth of the world’s gross domestic product and more than $100 billion in bilateral trade of goods and services.”

The ministry said the deal also is aimed at strengthening political and cultural ties with the EU, improving access to goods, services and investments by reducing restrictions and easing access to technology and raw materials.

Juncker said the deal would remove most tariffs on EU exports to Mercosur, saving more than 4 billion euros ($4.5 billion) worth of duties each year, four times as much as Europe’s pact with Japan.

The commission, which negotiates trade deals on behalf of the 28-nation EU, said the agreement is particularly important for industrial sectors like cars and car parts, machinery, chemicals, pharmaceuticals as well as clothing and footwear. Mercosur hopes to benefit with more exports of agricultural products including beef, poultry and sugar.

The EU’s farm and food sector also stands to gain, particularly products like chocolates, wine and spirits.

“The basics of this deal have been quite clear for some time. It’s cars and machinery and agriculture. But in the past, politics have stood in the way. Particularly in Brazil, which has had a very protectionist policy focusing on domestic production,” said Jacob Funk Kirkegaard, senior fellow, at the Peterson Institute for international economics.”And at the same time, the Europeans have been very protective of their agricultural sector.”

The commission said the deal, which still must be ratified by the legislatures of all the countries involved, will also ease border checks and cut red tape.

The agreement brings to 15 the number of pacts the EU has concluded since 2014, most recently with Canada and Japan, and comes as the bloc pushes ahead with international trade deals.

Brazilian President Jair Bolsonaro called it one “of the most important trade agreements of all times.”

The Brazilian government said the deal would boost Latin America’s largest economy by slashing tariffs for some agricultural products like orange juice, fruit and instant coffee, and expanding access via quotas for beef, ethanol and sugar.

“Brazilian companies will benefit from the elimination of tariffs on exports of 100 percent of industrial products. That will equalize the conditions of competition with other partners that already have free trade agreements with the EU,” it said.

The deal is “a game changer in Latin America as a whole, which historically has been very protectionist,” Kirkegaard said. “This could herald in a new era for Mercosur.”

Negotiations began on June 28, 1999, but have taken a long, torturous path marked by breaks and frustrations, as the countries’ different sensitivities and priorities were taken into account.

But EU Trade Commissioner Cecilia Malmstrom said the talks gathered momentum early this year, aided in part by a new Brazilian government that made the deal one of its priorities, and were pushed over the line by intensive negotiations over the last three days in Brussels.

“This is a landmark agreement,” Malmstrom told reporters in Brussels, flanked by negotiators and senior officials.

“With this deal we are showing that we believe that trade is a good thing. It brings people and companies together, and we send a loud and clear message in support of open, sustainable, mutually beneficial, rule-based trade.”

Cook reported from Brussels. Associated Press writers Almudena Calatrava in Buenos Aires, Argentina, Carson Gardiner and Yesica Fisch in Rio de Janeiro and Chris Rugaber in Washington contributed to this report. </s> WASHINGTON, July 31 — President Donald Trump yesterday said his administration is working on a free-trade agreement with Brazil, to cement closer ties between the two largest economies in the western hemisphere.

“We are going to work on a free-trade agreement with Brazil. Brazil is a big trading partner. Other than that, we love the relationship,” Trump told reporters at the White House.

Brazilian President Jair Bolsonaro is scheduled to host US Commerce Secretary Wilbur Ross in Brasilia today.

“I have a great relationship with Brazil. I have a fantastic relationship with your president,” Trump said of the Brazilian leader, adding: “They call him the Trump of Brazil. I like that.”

Far-right Bolsonaro is part of a populist wave that has swept the Americas and Europe in recent years, making him a kindred spirit with Trump.

With about US$70 billion (RM288.7 billion) in two-way annual goods exchanges between the two nations, the United States typically enjoys a robust trade surplus with Brazil.

Major US exports include agriculture goods such as wheat and animal feeds as well as information and telecommunications services.

Imports include aircraft, fuels, coffee and meat as well as iron and steel.

In 2011, the two countries signed an agreement on trade and economic cooperation to ease commercial exchanges.

But Ross played down expectations for an agreement to be reached quickly.

Speaking to reporters in Sao Paulo, he also warned that a recent trade pact between the European Union and Mercosur countries — Brazil, Argentina, Paraguay and Uruguay — should not contain anything that would block a deal with the US.

Brazil’s deputy economy minister Marcos Troyjo told AFP a bilateral agreement with the US would be possible if it did not involve tariffs.

Otherwise, it would be necessary to involve its Mercosur partners in the negotiations. — AFP
Brazilian Minister of Economy Paulo Guedes announces that the full members of Mercosur—Argentina, Brazil, Paraguay and Uruguay—are negotiating a free trade deal with the United States.