Brazil agree to upgrade economic ties

Brazil agree to upgrade economic ties

Nov 17, 2004

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

After their first summit, held in this 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 South Korea and the South American common market called Mercosur. Brazil is a current chair of the four-nation organization, which also involves 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 flying to Brazil on Tuesday, on the second leg of his three-nation tour to South America. The tour also will include Chile.

Brazil also supported South Korea's participation in the Inter-American Development Bank as a full extra-regional member, turning from its earlier opposition to this out of fears that Seoul would compete too aggressively in the regional government procurement market currently dominated by Brazil.

"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," Chung Woo-seong, Roh's foreign policy adviser, told reporters.

Chung said Roh's visit had laid groundwork to jump-start relations between South Korea and Brazil, 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 South 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 are also discussing joint projects with Brazilian counterparts.

On Tuesday, South Korea's POSCO, the world's fifth-largest steel maker, secured a long-term supply agreement 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.

The summit talks were extended by 50 minutes from the original plan of an hour and a half as Roh and Lula talked amicably about their political careers, presidential spokesman Kim Jong-min said.

The two share family and political backgrounds. Both were born to poor families and are self-educated. Former human rights lawyer Roh and former union leader Lula have both emphasized national reform and battles against poverty and corruption.

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