August 14, 2022

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Uruguay says pursuing China trade deal with or without Mercosur partners

Uruguay says pursuing China trade deal with or without Mercosur partners

Uruguay insisted on Thursday that it would pursue a free trade deal with China with or without its partners in the South American Mercosur trade bloc.

As Argentina appealed for a common front at a Mercosur summit in Paraguay, Uruguay’s President Luis Lacalle Pou stood his ground, announcing that delegations from his country and China would be meeting “in a few days” to begin free trade agreement (FTA) negotiations.

Uruguay’s plans appear to contravene a Mercosur rule introduced in 2000 under which members must jointly negotiate common trade deals with third parties.

Created in 1991, Mercosur — a four-member bloc composed of Argentina, Uruguay, Brazil and Paraguay — represents a market of some 300 million people, with a territory of almost 5.7 million square miles (14.8 million square kilometers).

Lacalle Pou said his country would move forward with China, given the “anxiety and uncertainty” caused by the lack of progress on a Mercosur trade agreement with the European Union.

That deal struck in 2019 has not yet been ratified over concerns among some signatories about Brazilian deforestation.

Uruguay’s main exports include beef, dairy products, wood pulp, rice and soya beans.

Argentina’s President Alberto Fernandez said Thursday that any free trade agreement with China, a potential market of some 1.4 billion people, should be pursued as a bloc.

Insisting that “individual solutions” were not the way to go, he implored: “Mercosur must live many more years. It must live forever.”

Paraguay, which has diplomatic ties with Taiwan, also called for Mercosur unity, and expressed “concern” at the possible entry of Chinese products with preferential tariffs “that can threaten the industries of Paraguay and Argentina, as well as Brazil.”

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Lacalle Pou said after the initial negotiations with China, “of courseā€¦ the first thing we intend to do is to talk to Mercosur, to see if we all continue together.”

But he insisted Uruguay would go it alone if needed.

Mercosur said Wednesday it had concluded a free trade agreement with Singapore that would boost exports by about $500 million a year from $5.9 billion in 2021.

Brazil’s President Jair Bolsonaro was the only leader not to attend Thursday’s summit. He sent a pre-recorded message.