Call for Normalization of Trade Tariffs With Brazil

November 25, 2021
finance & economy

I ran annually imports $5 billion worth of essential goods from Brazil with a customs duty of up to 4% while the Islamic Republic’s exports to the South American country is less than $100 million per year, says the head of Iran-Brazil Chamber of Commerce.

Speaking to ILNA, Fakhreddin Amerian added that Brazil imposes over 100% in duties on Iranian exports and called on parliamentarians to pass a bill on devising a preferential trade agreement between the two countries for cutting Brazil’s import tariffs on Iranian goods for a more balanced bilateral trade regime.

“Iran can boost its exports of petrochemical products, gasoline, pistachio, raisins and dates to Brazil,” he said.

The official noted that Iran imports 50-60% of its essential goods from Brazil.

Also known as necessity goods, essential goods are products consumers will buy, regardless of changes in income levels.

Joint Chamber of Commerce Established

Iran-Brazil Chamber of Commerce was inaugurated in a meeting held in the presence of Iranian and Brazilian officials and parliament members, Mehr News Agency reported on Saturday.

Speaking in the meeting, Iran's Ambassador to Brazil Hossein Gharibi expressed satisfaction with the opening of such an institution for Iranian and Brazilian private sectors.

The envoy called for the expansion and diversification of relations between the two sides.

Brazil is an active member of Mercosur, he added, noting that Iran also boasts a good market and can facilitate relations between Mercosur and Eurasian and Asian countries in the region.

Mercosur is a South American trade bloc established by the Treaty of Asunciَn in 1991 and Protocol of Ouro Preto in 1994. Its full members are Argentina, Brazil, Paraguay and Uruguay. Venezuela is a full member but has been suspended since 1 December 2016. Associate countries are Bolivia, Chile, Colombia, Ecuador, Guyana, Peru and Suriname.

Mercosur is aimed at promoting free trade and the fluid movement of goods, people and currency. Since its foundation, the body's functions have been updated and amended many times; it is currently confined to a customs union, in which there is free intra-zone trade and a common trade policy between member countries.

In 2019, Mercosur had generated a nominal gross domestic product of around $4.6 trillion. The bloc is placed high on the human development index. It has signed free trade agreements with Israel, Egypt, Japan and the European Union, among others.

Ahmad Naderi, the head of Iran-Brazil Parliamentary Friendship Group, said with the opening of the chamber, exports from Iran to Brazil will increase to balance the trade between the two countries, as imports from the South American country currently outweighs exports.

He noted that Brazil is the eighth largest economy in the world and Iran's most important trading partner in the Americas.

Iran’s Biggest Trade Partner in Latin America

Iran traded 1.14 million tons of non-oil commodities worth $702 million with Latin American countries during the current fiscal year’s first seven months (March 21-Oct. 22), latest data released by the Islamic Republic of Iran Customs Administration show.

Trade with Brazil stood at 906,886 tons worth $372.72 million, for the Latin American country to top the list of Iran’s partners in the region.

It was followed by Argentina with 207,007 tons worth $287.01 million, Venezuela with 17,402 tons worth $30.78 million, Mexico with 539 tons worth $2.28 million and Ecuador with 2,433 tons worth $1.75 million.

Iran’s exports totaled 260,347 tons worth $100.15 million during the period under review.

Brazil topped the list of export destinations among Latin American nations with 241,508 tons worth $82.39 million.

It was followed by Venezuela with 17,262 tons worth $14.37 million, Mexico with 372.34 tons worth $1.65 million, Argentina with 367.82 tons worth 733,732 and Chile with 320.79 tons worth $382,131.

Imports totaled 875,906 tons worth $601.82 million in the seven-month period and the main importers were Brazil with 665,377 tons worth $293.33 million, Argentina with 206,639 tons worth $286.28 million, Venezuela with 139.45 tons worth $16.42 million, Ecuador with 2,413 tons worth $1.74 million and Uruguay with 151.43 tons worth $1.105 million.

Latin America is a group of 20 countries and 13 dependencies in the Western Hemisphere where Spanish, French and Portuguese are predominantly spoken. The region is spread over approximately 19,197,000 square kilometers, almost 13% of the Earth's land surface area.

The services sectors in the region were more resilient to the Covid-19 delta variant and exports also performed well.

Average GDP grew 0.1% quarter-on-quarter in the largest six Latin American countries (the LatAm 6, which comprises Argentina, Brazil, Chile, Colombia, Mexico and Peru). The biggest upside surprise was Chile, which expanded 1.0% QOQ despite reimposing lockdowns, due primarily to very strong growth in durable goods consumption (12.6% QOQ), boosted by allowances to withdraw funds from individual pension accounts. This pushed up 2021 GDP growth projection for the LatAm 6 by half a percentage point to 6.5%, after contracting 6.8% in 2020.

Forecasts for 2022 and beyond remain broadly unchanged, as the region is seen converging toward its long-term average of 2.5% growth. The region will continue to face the same structural economic challenges it did before the pandemic: slow productivity growth, driven by low and inefficient investment.

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