Korea, Brazil Agree to Upgrade Economic Ties

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Korea, Brazil Agree to Upgrade Economic Ties

November 24, 2004


The leaders of South Korea and Brazil agreed on November 16 to upgrade bilateral ties to facilitate mutual exchanges in various areas including trade, energy and information technology.

After their first summit, held in the Brazilian capital, President Roh Moo-hyun and Brazilian President Luiz Inacio Lula da Silva adopted a 14-point joint statement, laying out a series of measures for substantial cooperation between the two countries. Among the steps, the two sides will establish a consultative mechanism to discuss cooperation projects in the area of energy and natural resources. The two countries' energy ministers signed a memorandum of understanding to that effect.

According to the summit statement, a joint study will be launched to explore the feasibility of signing a trade agreement between Korea and Mercosur, the South American common market. Brazil is a current chair of the four-nation organization, which also comprises Argentina, Uruguay and Paraguay. Roh earlier acquired support from Argentina on the issue when he had a summit with Argentine President Nestor Carlos Kirchner before visiting Brazil.

Brazil also supported South Korea's participation in the Inter-American Development Bank as a full extra-regional member. "It is now almost guaranteed that Seoul will join the regional organization, which is expected to enable South Korean companies to participate in the government procurement market in South America worth $14 billion a year," according to Chung Woo-seong, Roh's foreign policy adviser.

Chung said Roh's visit had laid groundwork to jump-start Korean-Brazilian relations, which will contribute to Seoul's bid to establish a bridgehead to South America, with its abundant energy supplies and natural resources. Brazil is the largest market and has taken a leading role in the region.

In the summit agreement, Roh and Lula promised to improve the bilateral relationship to a "comprehensive cooperative relationship for common prosperity in the 21st century" from a "special relationship in the 21st century" that was agreed in 2001 during then Brazilian President Fernando Henrique Cardoso's visit to Seoul.

To boost bilateral economic exchanges, Roh and Lula also agreed to encourage Korean companies to participate in public and private projects in Brazil, which cover the areas of oil exploration, energy, and various construction projects such as highways, railways and ports. They also promised to establish an IT cooperation center in Brazil at an early date.

During Roh's three-day visit to Brazil, South Korean companies will also discuss joint projects with Brazilian counterparts. Korea's POSCO, the world's fifth-largest steel maker, secured a long-term supply agreement on November 16 to source iron ore from the Brazilian mining group, Companhia Valo do Rio Doce, or CVRD. The agreement ensures a supply of 100 million tons between now and March 2015, a contract valued at US$2.1 billion, POSCO said.

The trade volume between the two countries reached $2.76 billion last year, with Korea exporting $1.14 billion of mostly electronics and automobiles, and importing $1.62 billion in produce and natural resources.

Following the summit, Roh met with Brazilian parliamentary leaders and attended an official dinner meeting with Lula before flying to Sao Paulo to speak at a meeting of Korean and Brazilian business leaders and meet with Korean residents.

 

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