Uruguayan President Luis Lacalle Pou announced the launch of free trade negotiations with China. Uruguay is also a member of Mercosur, a regional trade bloc that stands against member states entering into unilateral trade deals with third parties. Therefore, Lacalle Pou’s announcement is seen as another nail in the coffin for the increasingly fractured Mercosur, which has seen increasing tensions between members as Uruguay and Brazil push for greater flexibility and the removal of the common external tariff while Argentina pushes back against such initiatives.
On Tuesday, the Uruguayan leader met with representatives of all political parties to discuss a proposal from the Chinese government. During the meeting, he acknowledged the importance of Mercosur but declared that Uruguay was willing to adopt a more independent stance if the bloc is not willing to accommodate its interests.
He said, “This government has for a long time manifested its intention to advance towards the world with all Mercosur partners, but at the same time, it has been said that if it was not possible, Uruguay would try.” He added, “We always said that Mercosur has more negotiating power as a whole, but we were not willing to stay put if the others do not advance.”
To this end, he said that his government had informed Argentina about Uruguay’s interest in pursuing a deal with China. In fact, Lacalle Pou and his Argentine counterpart, Alberto Fernández, met both earlier this year in Mercosur’s virtual heads of state summit and last month in a face-to-face meeting in Buenos Aires. Keeping this in mind, he expressed hope that a potential deal with China would not endanger ties with Argentina but noted that Uruguay is not looking for approval from its Mercosur partners either.
Mercosur Dispute Coverage:
- Brazil and Uruguay Once Again Spar With Argentina at Mercosur Heads of State Summit
- Mercosur Remains Divided Over Common External Tariffs & Trade Agreements With Non-Members
- Uruguay Requests Meeting With Argentina to Resolve Ongoing Mercosur Dispute
- Uruguay and Brazil Escalate Dispute With Argentina Over Mercosur Trade Restrictions
China is Uruguay’s biggest trading partner, with the sale of Uruguayan exports to China from January to August of this year 63% higher than during the same period last year. Its major exports are beef, which accounts for 60% of its total exports. In August alone, Uruguay exported $233 million worth of goods to China.
Similar proceedings took place in Brazil, where the Brazilian National Conference of Industry established a Brazil-United Kingdom (UK) Task Group to explore trade and investment opportunities. Although the discussions do hope to advance a Mercosur-UK trade agreement, Brazil, like Uruguay, has also been pushing for the regional trade bloc to allow members to sign unilateral trade deals.
In April, Argentina somewhat relented in its position by agreeing to reduce tariffs and even remove them on 1,900 items that have been identified as having no impact on domestic industries. However, it still remains reluctant to accede to the kind of flexibility that Uruguay and Brazil desire, arguing that certain restrictions are necessary to protect domestic industries.