{"id":50012277,"date":"2018-11-13T11:52:53","date_gmt":"2018-11-13T11:52:53","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=12277"},"modified":"2019-01-17T17:53:14","modified_gmt":"2019-01-17T17:53:14","slug":"12277-uruguay-seeks-alliance-with-china-challenging-mercosur","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/12277-uruguay-seeks-alliance-with-china-challenging-mercosur\/","title":{"rendered":"Uruguay seeks alliance with China, challenging Mercosur"},"content":{"rendered":"

Uruguayan President Tabar\u00e9 V\u00e1zquez has a free trade agreement with China high on his agenda.<\/p>\n

In recent years, a stand-out feature of the country\u2019s foreign policy has been its desire for commercial rapprochement with China. This has taken on new impetus under its pro-tempore presidency of Mercosur, a commercial bloc with Brazil, Argentina and Paraguay.<\/p>\n

Relations peaked at the recent\u00a0Mercosur-China Dialogue<\/a>\u00a0in Montevideo, resurrected by Uruguay after more than a decade years with no official encounters between the regional bloc and the Asian country.<\/p>\n

V\u00e1zquez made a commercial agreement the focal point of the meeting but regional partners did not meet the idea with the same enthusisam given the impact it could have on their economies.<\/p>\n

\u201cUruguay put the issue on the table as we are not advancing with the agenda that China wants in Latin America, which are free trade agreements,\u201d said Ignacio Bartesaghi, Dean of the Faculty of Business Studies at the\u00a0Catholic University of Uruguay.<\/a><\/p>\n

Since 2015 V\u00e1zquez has affirmed his desire for an alliance with China through Mercosur or a bilateral agreement between both partners. This is not currently authorised by the bloc\u2019s rules, which only permit regional alliances.<\/p>\n

In 2016, China published\u00a0a framework document<\/a>\u00a0on its policy towards Latin America and the Caribbean where it expresses its desire to \u201cexplore the bilateral commercial potential\u201d and specifically mentions the signing of free trade agreements (FTAs) with the countries of the region to achieve stable commercial relations.<\/p>\n

However, China\u2019s plan has materialised only partially. It has signed FTAs with\u00a0Chile<\/a>, Peru and\u00a0Costa Rica<\/a>\u00a0and has maintained smaller-scale agreements with the many other Latin American countries. Mercosur countries are limited by stricter rules.<\/p>\n

Food-producing countries like Uruguay need agreements with Asian countries such as China<\/p><\/blockquote>\n

\u201cThe commercial policy interests of the Mercosur countries are radically different. They do not have the same incentives for agreements,\u201d said Marcel Vaillant, professor in international trade at the University of the Republic of Uruguay.<\/p>\n

\u201cFood-producing countries like Uruguay need agreements with Asian countries such as China, since their rivals export to Asia on preferential terms,\u201d he added.<\/p>\n

In Argentina, President Mauricio Macri has gone back and forth in his relationship with China, at one point even calling for\u00a0a review<\/a>\u00a0of all agreements signed by his predecessor. Brazil\u2019s\u00a0President-elect Jair Bolsonaro<\/a>campaigned with a strong anti-China rhetoric, criticising the impacts of the Asian country\u2019s investments.<\/p>\n

As a result, Uruguay has not made progress in reaching an agreement at the Mercosur level and has limited possibilities for the future. However, a new bilateral approach could prosper given the shared desire of V\u00e1zquez, Macri and Bolsonaro to relax the bloc\u2019s rules.<\/p>\n

\u201cMercosur has been at an impasse for a long time and its progress has been limited, which explains Uruguay\u2019s rush,\u201d said Sergio Cesar\u00edn, coordinator of the Asia Pacific and Indian Studies Center at the University of Tres de Febrero (UNTREF).<\/p>\n

\u201cChina has stopped thinking about an alliance with the bloc and aims to have a bilateral relationship with the countries of the region,\u201d he added.<\/p>\n

Desire vs. Reality<\/h2>\n

Mercosur deputy foreign ministers welcomed Chinese counterpart Qin Gang to Montevideo at the end of October. His visit aimed to advance a common commercial understanding with Uruguay as organiser of the bloc\u2019s summit.<\/p>\n

However, with the meeting just a few days before Brazilian elections, progress was limited. Members analysed regional exchanges with China and the potential for closer economic integration.<\/p>\n

\u201cUruguay chose to promote the Mercosur-China Dialogue, but there are no real possibilities for progress because the agenda is \u2018bilateralised\u2019. Mercosur itself cannot shut down other complex negotiations that are in progress \u2013 and to that Uruguay wants to add an FTA with China,\u201d said Bartesaghi.<\/p>\n

At the summit, countries decided to \u201cmaintain the dialogue mechanism and agreed to give continuity to build a positive agenda, with the objective of promoting cooperation in areas of mutual interest and promoting trade and investment\u201d.<\/p>\n

The Uruguayan Ministry of Foreign Affairs issued a statement in which they considered the meeting as \u201can important milestone in itself as the Uruguayan pro tempore presidency managed to reunite this dialogue mechanism after 14 years of inactivity\u201d.<\/p>\n

Commercial relations<\/h2>\n

In October 2016, V\u00e1zquez and China\u2019s president Xi Jinping signed their countries up to a\u00a0strategic partnership agreement<\/a>. Since then, there have been many advances at the bilateral level.<\/p>\n

Whilst in China in August, foreign minister Rodolfo Nin Novoa, signed a\u00a0memorandum of understanding<\/a>\u00a0to incorporate Uruguay into China\u2019s\u00a0Belt and Road initiative<\/a>, becoming the first Mercosur country to be part of the global connectivity scheme.\u00a0<\/strong><\/p>\n

Uruguayan producers pay US$130 million of import tariffs in China annually. Within Mercosur the figure in US$1.5 billion, more than non-members pay. Nin Novoa has advocated the need for a preferential access agreement between the parties.<\/p>\n

\u201cUruguay pushes agreements with China to export primary products,\u201d said Marcelo Elizondo, an expert in international trade and director of the consultancy DNI. \u201cIt is the one most interested in a bilateral relationship within the region.\u201d<\/p>\n

China ranked first among Uruguay\u2019s export destinations last year<\/a>, with sales reaching US $2,5 billion (including through Free Trade Zones). China accounts for 23% of total exports, with beef and soya making up around half of the total. Exports to the Chinese market increased 12% annually on average between 2012 and 2017.<\/p>\n

\u201cChina knows that more attention will be paid to them operating diplomatically though Uruguay than in Argentina and Brazil. Those are industrially diversified economies and China is a competitive global player. There are industrial sectors that are worried by China,\u201d Cesarin said.<\/p>\n

Uruguay\u2019s trade balance with China was positive in the first half of 2018. Although exports of goods fell by 9% and imports grew by 2% compared to the first half of 2017, the balance continues to favour Uruguay, as it did in the first half of 2017.<\/p>\n

Total exports reached US$840 million during the first six months of the year. Meat, seeds, oleaginous fruits (those which can be used to make oils) and wood were the three main items. Beef represented 46.8% of the total.<\/p>\n

At the same time, imports hit US$804 million in the same period. Motor vehicles, organic chemicals, plastics and manufactures were the main items brought in, representing 65% of Uruguay\u2019s total imports.<\/p>\n","protected":false},"excerpt":{"rendered":"

No advances at the faultering bloc\u2019s revived China summit as V\u00e1zquez pushes bilateral agenda<\/p>\n","protected":false},"author":40000225,"featured_media":50015830,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758],"tags":[510,50040720,600],"hashtags":[],"country":[50000020,50000021,20000110,50002600,50002602],"class_list":["post-50012277","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-china-in-the-world","tag-geopolitics","tag-trade","country-argentina","country-brazil","country-china","country-paraguay","country-uruguay"],"acf":[],"yoast_head":"\nUruguay seeks alliance with China, challenging Mercosur | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"President Tabar\u00e9 Vazqu\u00e9z pushed a bilateral trade agenda at the faultering bloc\u2019s revived China summit in Montevideo\" \/>\n<meta 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