Uruguay has signalled its intent to seek trade deals outside South America’s leading trade bloc, Mercosur, threatening a fresh crisis for the group ahead of a presidential summit on Thursday.
Uruguay said it would begin bilateral trade negotiations with other countries, after failing to reach an agreement on lowering tariffs and facilitating deals with third parties during a preliminary meeting of foreign ministers on Wednesday. The agreement had faced stiff resistance from the leftist government in Argentina.
Although Uruguay underlined that it remained a “full member” of Mercosur, the announcement marked a clear break with practices and traditions followed over the past 20 years by the customs union, which requires approval from other members if any country wants to cut deals with third parties.
“It is with more integration, not less, that [Mercosur] will be in better conditions,” said Argentina’s president, Alberto Fernández, during his opening address at the summit on Thursday, underlining the importance of consensus among the bloc’s members and adhering to its rules — remarks that appeared aimed at Uruguay’s unilateral move.
The 30-year-old bloc, whose members also include Argentina, Brazil and Paraguay, has been beset by tensions since signing one of the world’s largest trade pacts with the EU in 2019.
The centre-right Uruguayan government’s push to make the trade bloc’s rules more flexible, aimed at modernising the group, are broadly supported by Brazil and Paraguay.
But they could also raise tensions as Argentina hands over its temporary six-month presidency of the bloc to Brazil on Thursday.
After a rare and brief overlap of pro-market political leaders in Mercosur’s historically protectionist two main countries, Brazil and Argentina, relations between the alliance’s members have deteriorated since the return in late 2019 of a leftist government in Argentina led by Fernández, who has sparred publicly with far-right president Jair Bolsonaro in Brazil.
Bolsonaro — who has called Fernández a “red bandit” — has previously threatened to leave Mercosur if Argentina causes trouble. Diplomatic relations with Brazil worsened last month when Fernández made controversial remarks suggesting that Brazilians originated from the Amazon jungle, while Argentina had been largely populated by European immigrants arriving by boat.
The bloc’s relations were strained further after a pro-market and reformist government led by Luis Lacalle Pou came to power in Uruguay last year, replacing a leftist coalition that had governed the country for the previous 15 years.
Lacalle Pou and Fernández traded barbs at Mercosur’s last presidential summit in March, when the Uruguayan leader urged the group to allow more freedom for its members to negotiate free trade agreements. “If we are a burden, take another boat,” Fernández responded at the time.
The picture has been further complicated by political dynamics — with important elections on the horizon in both Brazil and Argentina — and the economic fallout from the Covid-19 pandemic in Latin America.
Source: Economy - ft.com
