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Homework Title / No. : _assignment

1___________________________________________Course Code : _________

Course Instructor : ____shivender sir__________________ Course Tutor (if applicable) :

____________

Date of Allotment : _____________________ Date of submission : ___________________

Student¶s Roll No._A13 A14 A12______________________ Section No. :

_______q1903__________________


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I declare that this assignment is my individual work. I have not copied from any other student¶s
work or from any other source except where due acknowledgment is made explicitly in the text,
nor has any part been written for me by another person.

Student¶s Signature :
____khushboo

Kamal

kadambri_________

Evaluator¶s comments:
_____________________________________________________________________

Marks obtained : ___________ out of ______________________

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MERCOSUR is a trading block in Latin America comprising Brazil, Argentina, Uruguay and
Paraguay. It has Chile and Bolivia as its associate members. MERCOSUR was formed in 1991
with the objective of facilitating the free movement of goods, services, capital and people
among the four member countries. MERCOSUR has become a successful market of about 200
million people, representing about 1 trillion dollars of GDP and 190 billion dollars of trade. It
is the fourth largest integrated market after the European Union (EU), North American Free
Trade Agreement (NAFTA) and ASEAN.
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A Framework Agreement had been signed between India and MERCOSUR on 17th June 2003
at Asuncion, Paraguay. The aim of this Framework Agreement was to create conditions and
mechanisms for negotiations in the first stage, by granting reciprocal tariff preferences and in the
second stage, to negotiate a free trade area between the two parties in conformity with the rules
of the World Trade Organization.

As a follow up to the Framework Agreement, a Preferential Trade Agreement (PTA) was

signed in New Delhi on January 25, 2004. The aim of this Preferential Trade Agreement is to
expand and strengthen the existing relations between MERCOSUR and India and promote the
expansion of trade by granting reciprocal fixed tariff preferences with the ultimate objective of
creating a free trade area between the parties.
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A framework trade agreement was signed between India and the Mercosur trade block of Latin
America on the 17th of June in Asuncion, Paraguay. This sets in motion the process that will
ultimately establish a 'Free Trade Area' between the Indian market and Mercosur - the Southern
Core Common Market in Latin America. The signing of the framework agreement will pave the
way to enter into Preferential Trade Agreement as the first step and ultimately to negotiate a Free
Trade Agreement in long-term interest. The protocol calls for clear-cut, reliable and enduring
ground rules to further the development of trade and investment. India is a significant point of
reference for Mercosur, and not solely on account of the extraordinary growth that we have
witnessed in some sectors, such as information technology and specialty chemicals.

Our major items of exports to MERCOSUR are drugs, pharmaceuticals and fine chemicals,
transport equipment, inorganic/ organic/ agro chemicals, cotton yarn and cotton and manmade
fabrics, made-ups, readymade garments, dyes, intermediates and coal tar. The major imports
into India from MERCOSUR are edible oils (primarily soya), metalliferous ores, metal scrap
and non-electrical machinery.
For India, this offers major trading possibilities since Mercosur is the third largest common
market in the world, after the US and the European Union. For Mercosur, which has been keen to
develop markets outside the US and the EU, its largest trading associates outside of Latin
America, this also poses exciting opportunities. India, with its second highest growth rate among
the developing nations and a population of over one billion, can offer a market which is both
large and possesses considerable buying power.

In the post WTO world, where preferential trade agreements are flourishing, this agreement has
even more potential. It can help identify alternate and sometimes cheaper sources of goods
between the trading partners. It can also therefore undermine the dominance of other trading
partners. So this agreement can also be used as a tool for strategic reasons. It also helps to
facilitate co-operation between the weaker developing countries and help the South build a joint
economic perspective.

The four member countries hold a population of almost 200 million (Brazil 150; Argentina 33;
Paraguay 4,5 and Uruguay 3,1); a total area of 11863 square kilometres; a GNP of over 700
billion US dollars and foreign trade adds up to 120 billion US dollars. Intra-regional trade within
Mercosur is being gradually liberalised. Tariff on 90% of intra-regional trade has been removed,
with Common External Tariff (CET) ranging from 0-20%. Since the signing of the Asunción
Treaty in 1991 inter regional trade has almost tripled from 5,1 billion US dollars to 14,38 billion
in 1995, while trade with the rest of the world increased from 67 to 120 billion US dollars. Chile
and Bolivia are associate members of MERCOSUR.

Initiatives for greater interaction between the Latin American economies and India have already
begun. The Focus-LAC (Latin American Countries) programme, the most important from the
Indian side, which is an integrated effort of Government of India, Indian Trade Promotion
Organisation, Export Promotion Councils, Chambers of Commerce and Industry, and Institutions
such as the Exim Bank and the Export Credit Guarantee Corporation of India (ECGC), had been
drawn up in 2000 to enquire into greater trading possibilities in the Latin American region.
Among the Mercosur countries, the programme concentrated on the giants, Brazil and Argentina.

Trade between the two countries had also been increasing in the recent past. Uruguay and
Paraguay have a negligible presence at the moment. India's shares in Brazil and Argentina's
imports are also higher than the average, at 0.98 and 0.74 per cent. Brazil has been the most
dominant trading partner of the four, and India's share in Brazilian imports has steadily increased
from 0.27 % in 1994 to the present figure. On June 15-16 2010 India-Mercosur meeting held in
New Delhi, the deepening and widening of the India-Mercosur PTA was discussed. It was
discusses that they wanted to increase the volume of trade, particularly, the soybean import to
India. In fact, a large agri-export company is already in advanced stages of discussions with the
government and may announce its foray into the country shortly. India currently exports
pharmaceutical, agricultural machinery, automobiles spare parts and spices to the Latin
American country. they wanted to have joint-venture and technology-transfer agreement in
communications, agriculture, food processing, ayurveda and biodiesel sectors. The potential for
Indian businessmen to invest in Paraguay form a joint venture with existing Paraguay players, is
huge. Currently, trade between India and Paraguay is worth only $20 million. A few Indian
companies from the pharmaceutical and food-processing sectors have invested in the country to
benefit from the free-trade zones and gain access to Latin American markets.

Paraguay¶s eagerness to engage with India on `food security¶ can be judged from the fact that it
is ready to accommodate Indian interests by allotting a special quota in soya bean oil. According
to Ficci officials Paraguay¶s economy is mainly based on agriculture, agri-business and cattle
ranching. The country is ranked as the world¶s fourth-largest exporter of soybeans. Other agri
products include corn, sunflower, cotton, wheat, tobacco and sugarcane. The country has vast
tracts of arable land which could be used for agriculture. Thus, there is immense potential for
investment and joint ventures in agri-business by Indian enterprises. A businessmen doesn¶t have
to pay VAT (which is 10%) and is also exempted from excise duties for the first five years. Also,
depending on the investment and the company, the government gives additional incentives. In
addition to this, the tax burden in Paraguay is 9.9 %, compared with 21.4% in Brazil and 20.4%
in Argentina.

Also considering the average cost of land, which varies between $800 and $1,000 per hectare
and the availability of young labour (70 % of the population is below 30 years), Indian farmers
will find huge opportunities to invest in the country.

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The problem of geographical proximity had always been a key issue for trade between India and
South America. Transport has turned out to be expensive and time-consuming. This was a major
determinant of trade in this case, since many studies have shown that geographical proximity
remained an important reason behind the high intra-regional trade that Mercosur pursued with
vigour . This obviously conferred significant advantage on member and neighbouring countries
and imposed certain disadvantages for far away countries like India. The fact that very few direct
shipping lines existed between India and the Mercosur countries compounded the problem.

Another major factor that encouraged intra-regional trade in Mercosur and discouraged trading
possibilities outside was the regime of preferential tariffs within Mercosur and within the close
geographical region around Mercosur. The differences between Mercosur's common external
tariff regime applicable to India and its intra-tariff regime in conjunction with the preferential
tariffs for Andean Countries and Mercosur plus created major disincentives for Indian exporters
since it gave competing South American countries substantial comparative advantages. This
compounded by the fact that many commodities in which India had export potential showed a
strong interdependence between the Mercosur countries. So given the geographical proximity
and tariff advantages, it was very difficult for India to gain sufficient market access for those
commodities where the intra-regional dependence is more than 80 percent. Now, with the
signing of the Free Trade Agreement becoming a possible reality, this disadvantage should get
greatly reduced.

Another tariff related problem that imposed a major restriction on trade was the rate of Common
External Tariffs (CET) imposed on other countries including India. These were marked by an
escalation over time. Non-primary products, which are a major importable for the Mercosur
countries, showed very high levels as well as a tendency to grow at a steep rate. A forecast by
Laird (1996), which in reality has borne out, showed average rates of escalations in CET
between 1995 and 2001-06 to be 6.3 % for goods in the first stage of processing, 9.1% for semi
processed goods and a massive 12.5 % for fully processed products. Both machinery and
transport equipment (Mercosur's biggest importable) and chemicals including pharmaceuticals
(only the second/third highest demand in all 4 countries), for which there is a big demand in the
Mercosur countries, fall in these categories. Since these happen to be the biggest exports from
India to Mercosur, the escalation in tariffs affected India significantly. A Free trade Agreement
would also eliminate the significance of this escalation for India.

In addition to tariff barriers, India had also faced non-tariff measures (NTM) on its major exports
to Mercosur. This effect was stronger in Brazil and Argentina, India's major markets within
Mercosur, which had a regime of higher NTMs in manufactured goods compared to Uruguay
and Brazil. It is interesting to note that chemicals and industrial inputs, which form bulk of
India's exports to Brazil and Argentina, are the sectors that faced more than 80 percent incidence
of NTMs in these two countries. Another major export, textiles, happens to be a highly protected
sector in Argentina with about 100 percent NTM incidence, while the NTM incidence in Brazil
on textiles is about 10 percent. The signing of the agreement should remove these barriers to a
large extent.

However, a crucial factor has been working in favour of the Indian exporters in the recent period.
After the crises in Argentina and Brazil, both these countries have been looking for cheaper
sources of imports. This requirement, most developed countries like the US and the EU cannot
fulfill. Much of this import demand is for cheap intermediate industrial goods, which India can
offer at much cheaper rates compared to the West. Once trans-shipment problems over a long
distance are better taken care of and tariff barriers go down, there would emerge a great potential
for Indian exports in this segment.

The Agreement offers further opportunities for export by Indian traders of a wide range of
products some of which are already exported to the region. Drugs, pharmaceuticals and
chemicals dominate India's exports to Mercosur at present and accounts for 27.8 per cent of the
total exports to that region in 2000-01. Organic chemicals, followed by pharmaceuticals
dominate trade within this sector. This category is followed by transport equipment,
inorganic/organic/agro chemicals, plastic and linoleum products, dye intermediates, cotton yarn
fabrics, readymade garments, cotton manmade yarn fabrics, electronic goods and coal tar. Diesel
oil has been a recent addition to India's export basket to Brazil.

Pharmaceuticals present a major area for Indian exports. Brazil provides the single largest
opportunity in this sector. Despite a recent contraction, the Brazilian pharmaceuticals market
continues to be the 10th largest pharmaceutical market among countries that protect intellectual
property. According to ANVISA, in 2000-2001, Brazilian generics industry invested
approximately US$ 175 million. In spite of such investments, the industry imports far more than
it exports. In 2001, imports of formulations was US$ 1.25 billion while imports of bulk drugs
reached US$ 780 million, according to the Brazilian Association of Chemicals and
pharmaceuticals, ABIQUIM. Exports of formulations from Brazil amounted to US$ 241.7
million. As far as the sale of value added Indian formulations is concerned, figures went up from
US$ 34.35 million in 2001, to 50.5 million in 2002. There was a decrease in the sale of organic
chemicals (mainly bulk drugs) from US$ 131.37 million in 2001, to USD 114.29 million in
2002.

An Exim Bank study, published in May 2002, indicated that India's presence in the Mercosur
region through FDI or through joint ventures has been concentrated mainly in the pharmaceutical
sector. Ranbaxy launched their joint venture in Sí£o Paulo in pharmaceuticals in 1999. Being the
leading performer it has over 50 formulations registered. Core Health Care/ Claris Life Sciences,
has a subsidiary marketing their products in Sao Paulo. M/s Strides Arcolabs have also formed a
joint venture in Rio de Janeiro. On 19th September Strides Arcolabs inaugurated operations of a
factory in the State of Espirito Santo for manufacturing finished products. Torrent
Pharmaceuticals launched its range of branded generics in August, 2002. Aurobindo Pharma is
about to launch its formulations, after obtaining GMP certification. Zydus Cadila and IPCA
already obtained GMP certification.

Some pharma companies like Wockhardt, Unichem, Lupin Laboratories, NATCO and others are
planning to set up operations in Brazil. M/s Hetero, CIPLA, IPCA Brazil, Medicorp, Alembic
and others supply bulk drugs. Serum Institute of India, Pune sold about Rs. 50 crores worth of
vaccines to the Brazilian Government company, FUNASA against an international tender in
2000.

Pharmaceuticals represent 2.57 % of Mercosur imports, while India supplied only 16 million
US$ worth of goods that amounted to 0.71% of total pharmaceuticals import.

Engineering goods is another key export segment for India. Some engineering firms like
Thermax, Electronic Hitech Components are also trying for investment/partnership. The Exim
Bank study also pointed out that infrastructure projects such as electricity transmission; telecom,
oil and gas also present significant opportunities for major Indian companies such as KEC,
Kalpataru Projects, Reliance and Tatas.

Among the other exports to Mercosur, that of organic chemicals to the Mercosur has however
been coming down over the last two years. However, exports in absolute terms remain high.
Plastics and linoleum products that India is already supplying to Mercosur, offer a potent growth
area. It occupies 5.64% of Mercosur's total imports while India supplies less than 0.5% of the
total amount imported. Transport equipment, another important export from India to Mercosur,
presents a similar scenario. This sector represents nearly 10% of Mercosur's total imports but
India supplies only 0.41% of its imports. Given their large shares in total imports of the trade
bloc, there is scope for contributing much larger exports in absolute terms in both these sectors.
Textile and products is another sector which appears to offer major opportunities for the Indian
exporter. This category occupies around 3-4 % of Mercosur's imports. India supplies, mainly
apparel and clothing accessories, man made staple fibres and filaments, only 2 to 2.5 % of these
imports. India has been looking to greatly increase its exports in this segment. In 2000, India
supplied only 1.35% of total tanning or dyeing extracts imported by Mercosur. Though this
sector represents only about 1% of Mercosur imports, it still offers a potential for larger exports
than India is delivering at the moment.

Apart from the trade in goods, trade in services has turned out to be a new potent area for
exports. E-commerce is an arena in which Indian companies can establish its presence in the
Mercosur region. Information technology, it has been indicated by Indian government sources, is
to be a key export segment in future. This sector has already witnessed substantial gains in the
recent period. Indian IT sector exports to Latin America in 2002-03 was around 583 million US
dollars. Though it is still a low figure compared to India's exports to the US and Western Europe,
the share being only 5.9 % of India's total IT services export and 3.33 % of Latin America's
equivalent imports, it is growing steadily and can reach a huge market in Mercosur.

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The Mercosur countries, on the other hand, can also export several commodities to India, edible
vegetable oil being the foremost at present. However, geographical proximity remains the major
problem with Mercosur exports.

Edible vegetable oil is the dominant single export to India, with the largest share of 67.09 per
cent in total Mercosur exports. This share, which was only 3.25 per cent of total Mercosur
exports in 1994, rose steeply to 28.39 per cent the next year. It continued to rise steadily till it
reached around 70 per cent in 1998 and remained there till 2000, and this trend shows no sign of
a reversal thereafter.

Due to gross inadequacies in its processing industry, India is the world's biggest importer of
edible vegetable oil. Vegetable oil constitutes as much as 70% of India's total agricultural
imports and about 2.9 % of all Indian imports. Of total imports of vegetable oil, soyabean oil,
which is imported from Brazil and Argentina, has the second highest share. In 2001-02 the value
of edible oil supplied by Brazil was 125.96 million US$ and that by Argentina, 387.46 million
US$. This implies respectively a 40.87 and a phenomenal 88.86 % of total Brazilian and
Argentinean exports to India. A cut in duty rates from 1999-00 meant that export possibilities for
Mercosur was already going up. However, there were some later increases to those rates though
export potential for soyabean oil remains very high and import figures for 2001-02 turned out to
be 1.3 million tonnes. After a free trade agreement, this process should get a further boost.

Other exports include petroleum and products , machinery, non-ferrous metals, metaliferrous
ores and metal scrap, crude minerals, non-electrical machinery, leather, professional instruments,
cotton and raw wool. Among the exports of Brazil, machinery and mechanical as well as
electrical appliances and parts occupied an important 11% of total export to India in 2001-02.
Vehicles and parts (other than rail or tramways) contributed 8.82 % of total. Organic chemicals,
metal products and cotton occupy shares of 7.96, 7.32 and 6.63 % respectively. Since Edible oil
occupies a huge share (88.86%) in Argentina's exports, other items individually contribute
negligible shares. Leather and products (2.81%), Cotton (2.22%) and metal and products (2.01%)
are the other exported commodities.

As far as India's present import pattern is concerned, mineral fuels and oils (including petroleum
products) occupied a huge 30.67% in 2001-02. Machinery and mechanical products etc
contributed an 8.26%, electrical machinery and equipments a further 6.19 %. Metal and products
together occupies about 5% of total imports. So it is obvious that the Mercosur countries, Brazil
and Argentina in particular, have a tremendous potential in exporting these commodities to India.
India offers a huge demand in the respect of all these commodities. Exports have already begun
to pick up, and after the agreement, there is no reason why Mercosur cannot capture a large
market in these products in the Indian territory. Pearls, semi-precious stones and imitation
jewelry is another potential export for Brazil. At present it occupies only about 2% (2001-02) of
Brazilian exports to India. But given that fact that this category occupies a large 18.19% of total
Indian imports at present, and that Brazil is supplying only 0.06% of this import, it represents a
huge potential. Given the consumer boom, and the fact that India has been among the highest
growing countries within the developing countries, indicates that this demand is unlikely to
diminish in the near future.

After the signing of the agreement, the Indian Government stated that India is expecting to
become a big buyer of Brazilian ethanol fuel derived from sugarcane in the near future. Brazil is
the world's leading sugarcane grower. Brazil has also been using alcohol mixed fuel for over
three decades now. A delegation from Brazil has already visited India (and China) in 2002 for
discussing possibilities of export from the alcohol and the automotive sector. One significant
benefit of this for India would be a reduction in dependence on OPEC oil, which has seen major
price fluctuations over the last few years.

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However, signing of treaties is not enough to boost trade between the two regions. More on-the-
ground efforts must take place before the potential can be fully realised. A better institutional
mechanism to facilitate grievance redressal, dispute settlement, and registration problems must
be in place soon. Information flow, exchange of delegations, and participation in trade fairs
remain some of the other major areas that need to be looked into. Specific apparatus needs to be
set up on both sides for facilitating these particular areas. Language remains another major
problem. Since Mercosur and India do not really have a language in common, communication
between trading bodies and more specifically, translation of documents can pose major
difficulties. The respective governments have to provide support services in these areas too.

The actual trading process also requires smooth and cheap movement of goods. Despite the
official launch of direct shipping lines, the absence in reality of direct sailing vessels or direct
flights can end up making goods lose part of their price advantages. Physical trading also
requires greater warehousing facilities and improved logistics support. Moreover, most trading
agents in countries like Brazil and Argentina ask for 180 days under open credit, which may be
difficult for Indian traders to provide.

Anti±dumping duties have also been an area of dissent in the past. For example, one of
Mercosur's important trading members, Brazil, has imposed anti dumping duty on jute bags and
cycle tyres exported from India. The Brazilian government has also been implementing a policy
of non-automatic import license requirements for certain export products of India, particularly
stationery, polyester films, garments etc. The procedure involves internal fixing of minimum
price subject to which import licenses are issued. On the other hand, India has imposed anti-
dumping duty since 1995 on Brazilian chemical BISFENOLA, and has imposed provisional anti-
dumping duty on import of Poly-Iso-Butylene and acrylic fibre from Brazil from December
2001. Though many such duties have been revoked in the past, like in the case of ceramic lime
export from Brazil and cycle free wheels exported from India, these disagreements need to be
sorted out faster in the future so that full benefits of a free-trade agreement can be reaped.

The governments of India, Brazil and Argentina, on their parts, have encouraged apex trade
associations to organise seminars and delegate exchanges to encourage greater interaction
between businessmen in Mercosur and India. For example, the Confederation of Indian Industry
and Federation of Indian Chambers of Commerce and Industry have arranged seminars and the
exchange of trade information in Brazil. From the Indian side, the market development
assistance scheme is fairly liberalised for travel to LACs, maintaining warehouses in LACs,
participation in trade fairs in LACs and opening offices in the countries. Increased textile quotas
are available against exports to LACs. The Export Credit Guarantee Corporation has also revised
the rating of most LACs to encourage exporters to take greater risks. Similar initiatives have also
been launched by Brazil and Argentina in the recent past.

Other region-specific efforts for undertaking a joint initiative to promote and launch a new
professional association have also gradually been building up. A major among these is the "Latin
America/Caribbean and Asia/Pacific Economics and Business Association (LAEBA)", set up
jointly by the Inter-American Bank (IDB), through the Integration and Regional Programs
Department, and the Asian Development Bank (ADB), through the ADB Institute. LAEBA will
be dedicated to strengthening linkages between the Latin America/Caribbean and Asia/Pacific
regions, through a variety of activities including the promotion of research. The ultimate aim is
to improve trade and cooperation between these regions. India and Mercosur should be able to
reap considerable benefits through these associations.
Despite these efforts, trade has increased but not so much in actual volume terms. India, at
present, comprises only 0.83 per cent of Mercosur's imports. And Mercosur supplies only 1.5 %
of India's imports.


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Notwithstanding all the negatives, however, there stands out a large positive. And that is the
realization, that both sides need the forging of a bond that is based on the recognition of mutual
advantages. These advantages involve not only the identification of cheaper sources of imports
and larger markets for exports. They entail other factors much broader and deeper in their
implication.

This kind of understanding is crucial for developing a south-south cooperation that has not only a
political, but also a strong economic basis. This is important because only a joint economic
perspective driven by joint economic interests within the south can strengthen stands against
exploitative economic forces. And that requires a relative independence from northern
economies. Most developing countries are presently heavily dependent on trade with the western
world, especially for the supply of manufactured goods. Therefore, first of all, locating and fully
utilizing all trading potential within the south, more so for industrial goods, is a must.

Second, this kind of alternative economic relationships then can create strategic advantages in
trading negotiations with other countries more powerful than India or any of the Mercosur
countries. For example, Mercosur is going into trade agreements with the European Union and
talk about Free Trade Area of the Americas (FTAA) is underway. Such negotiations are
immersed in controversy. Agreements on unequal terms can only be for short-term gains. In fact,
even promised or expected short-term gains may not finally materialize for Mercosur. Such trade
agreements can be beneficial to the southern economies only if they receive actual concessions
when they give it. Based on past experiences, outcomes of compliance with WTO trade rules
have not been happy for the Latin American economies. The US has prized open many of the
Latin American economies but has not opened up its own completely to them. The US in
particular has a history of not abiding by rules it insists on implementing. But signing alternative
agreements with other important trading partners can limit the scope for damages by agreements
such as the FTAA, and can give Mercosur, for example, the leverage to maneuver better terms
for itself. However, these potentials between not only two but many partners within the south
must be fully developed before they can be used as tools for self protection.

In addition, gains and objectives must be complementary and not conflicting for any trade
agreement to work. Unlike the FTAA as it now stands, the India-Mercosur agreement, arranged
between comparative equals on a give and take basis, has the potential to work given the
understanding of common goals and common perspectives. Finally, common understandings in
the field of trade can then pave the way for joint negotiations for the south in the WTO. India and
Brazil have already set such an example. Joint negotiations like this must preclude a convergence
of interests. In an atmosphere where western countries are intent on securing economic
hegemony with the use or misuse of trade, especially by arm-twisting the developing nations in
any way possible, locating alternative relationships that can replace such sources and
destinations of and for tradable goods is not merely another choice, it is gradually becoming a
necessity.
³This development will open up new trade and business opportunities for the nations at a time
when adverse fallout of the international financial turmoil has engulfed the world. Negotiations
for the expansion of India-Mercosur Preferential Trade Agreement (PTA) will be in New Delhi
early next month to discuss further and widening the list of goods with preferential tariffs
covered under this agreement.

The meeting would be attended by members of Brazil, Paraguay, Uruguay and Argentina and
senior officials from the external affairs and the commerce and industry ministries.

The PTA has been covered 450 items each of India and Mercosur exports since it become
operational in June 2009. The latter has become a successful regional market with GDP of $2
trillion. It is the third largest integrated market after EU and NAFTA. Its full members are
Argentina, Brazil, Uruguay and Paraguay.

Talking to FE, senior officials in the foreign ministry said that, µµThe talks for expanding the lists
has been scheduled for next month.¶¶

µµMercosur has already drawn up their list of 1,600 items and the Indian commerce ministry is
starting the list collection. Indian exporters, export promotion councils and trade and industry
bodies have been presenting their cases to the ministry, mentioning the item with the
Harmonised System code and percentage of preference they desire,¶¶ R Vishwanathan, Indian
ambassador to Argentina, Uruguay and Paraguay told FE.

With the signing of the PTA, it has been expected that the India and Mercosur trade would
double to $10 billion in the next 3 to 5 years.

While, the PTA contemplates lowering of tariffs for a list of specific products which include
chemical components, some agricultural items, household appliances and petrochemicals,
pharma ceutical products and components, vaccines, industrial machinery ( for India into
Mercosur).

³There's a bilateral agreement being enacted since June 2009 and we'd like to expand it,´ he said,
and added that ³there are over 900 products being exported from India to the Mercosur and vice
versa´ for which now they are trying to increase that flow since the region is being considered a
³long term business partner´ by the Asian country.

Mr. Viswanathan explained that a first round of negotiations had already taken place in April and
the Indian authorities are now awaiting a second round of meeting in September.

He also assured that ³some companies in India are using Argentina as a platform to enter the
Mercosur,´ and considered that ³Argentine companies can use the Indian market to do the same
in the Asian region.´

³The Mercosur is growing,´ he said, and quoted from a recent Cepal brief (UN Economic
Commission for Latinamerica and the Caribbean) pointing out that, when compared to the rest of
Latin America and the Caribbean, the four countries from the bloc ´would have the largest
growth in 2010´.-
The issue of food security is likely to figure in the upcoming India-Southern Common Market
(Mercosur) talks next week. One of the Mercosur members, Paraguay, is particularly keen on
taking up the issue with India. Paraguay is a part of Mercosur, formed by Argentina, Brazil,
Paraguay and Uruguay.