{"id":50056817,"date":"2022-07-28T17:39:05","date_gmt":"2022-07-28T16:39:05","guid":{"rendered":"https:\/\/stage.dialogochino.net\/?p=56817"},"modified":"2023-07-21T21:08:08","modified_gmt":"2023-07-21T20:08:08","slug":"56817-uruguay-china-fta-negotiations-tensions-over-mercosur-future","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/business\/56817-uruguay-china-fta-negotiations-tensions-over-mercosur-future\/","title":{"rendered":"Uruguay-China FTA negotiations raise tensions over Mercosur\u2019s future"},"content":{"rendered":"

The first face-to-face summit since the beginning of the pandemic for Mercosur, the regional trade bloc made up of Argentina, Brazil, Paraguay and Uruguay, exposed the rifts and differing visions for the bloc\u2019s future among its members. Uruguay said it would move forward with its bilateral negotiations with China, while Argentina and Paraguay urged caution over the next steps.<\/p>\n

Signing a free trade agreement (FTA) with China is a priority for Uruguayan president Luis Lacalle Pou\u2019s government<\/a>, which has already concluded a bilateral feasibility study and will soon begin negotiations. But there is a potential stumbling block: Mercosur rules prevent individual negotiations without the bloc\u2019s endorsement.<\/p>\n

\"Lacalle<\/a>
Read more: Uruguay bets on free trade deal with China outside Mercosur<\/a><\/strong><\/figcaption><\/figure>\n

This situation has pitted Lacalle Pou against his counterparts Alberto Fern\u00e1ndez, of Argentina, and Paraguay\u2019s Mario Abdo. But not so with Jair Bolsonaro, president of remaining Mercosur member Brazil, who has made no mention of the issue publicly, interpreted by many as support for making the bloc more flexible. These positions were repeated at last week\u2019s Mercosur summit, held in Asunci\u00f3n, Paraguay.<\/p>\n

In fact, the differences between the members of the bloc were so great that, as at the previous summit, there was no final joint declaration signed by all the countries. Uruguay did not want to support a document that did not refer to the possibility of reforming Mercosur to allow countries to enter into bilateral agreements.<\/p>\n

In a communiqu\u00e9<\/a>, Argentina, Brazil, Paraguay and Bolivia, which is asking to join the bloc and participated as a guest, refer to agreements and advances with different countries, but nothing is mentioned about China. For the communiqu\u00e9 to have the status of a declaration, it needs to have been signed by all member countries.<\/p>\n

\u201cThe summit showed the persistence of problems that have been dragging on for several years in the bloc,\u201d said Julieta Zelicovich, a lecturer in international relations at the University of Rosario. \u201cIf Uruguay were to sign with China, we would be facing an extraordinary situation for Mercosur that would open up a number of different scenarios.\u201d<\/p>\n

Disputes in Mercosur<\/h2>\n

In his speech at the summit, Fern\u00e1ndez questioned Uruguay\u2019s moves to negotiate bilaterally with China and asked Lacalle Pou to include the entire bloc in the talks. \u201cIf we don\u2019t realise that we have to be more united than ever, we are going to make the worst mistake,\u201d Fern\u00e1ndez said.<\/p>\n

The Argentine president said that initiatives such as Uruguay\u2019s are focused on the \u201cshort term\u201d, and that while he would not refuse to \u201canalyse everything that needs to be analysed\u201d on the issue of flexibility that Lacalle Pou is calling for, he asked that the countries \u201cgo through this discussion together\u201d.<\/p>\n

The best way to protect Uruguay is to open up to the world, and that is why it is taking the steps it is taking<\/p><\/blockquote>\n

In response, Lacalle Pou said that negotiations with China will begin \u201cshortly\u201d and that once this stage has been reached, he will talk to Mercosur member countries \u201cto go all together\u201d to add \u201cmore negotiating power\u201d. However, if Mercosur does not want to be part of the agreement, Uruguay will still proceed, the president added.<\/p>\n

\u201cPresident Fern\u00e1ndez\u2019s speech echoed a concept that he has repeated a couple of times, which is the concept of protecting ourselves. The best way to protect my nation is to open up to the world, and that is why Uruguay is taking the steps it is taking,\u201d Lacalle Pou reiterated.<\/p>\n

For his part, Paraguay\u2019s president Mario Abdo said at the summit that \u201cit is more convenient\u201d to negotiate a joint agreement with China, and that the issue is of concern to his government \u2013 which does not have official diplomatic ties with China. \u201cThey [China] have very competitive costs and this could threaten Paraguay\u2019s industries, as well as those of Argentina and Brazil,\u201d Abdo said.<\/p>\n

Brazil\u2019s president Jair Bolsonaro did not travel to Paraguay for the summit, and limited himself to a pre-recorded video address in which he did not mention the issue of agreements with China \u2013 something that Uruguay interpreted as an implicit endorsement. In fact, Brazil\u2019s foreign trade secretary, Lucas Ferraz, argued<\/a> that there is a \u201cneed for greater flexibility\u201d in the bloc.<\/p>\n

\u201cThe announcement made by Uruguay will certainly bring an even greater impetus to the debate [on flexibilisation] within the bloc. Whether or not we will permit Uruguay\u2019s move is a technical question,\u201d Ferraz said. That \u201cwill happen at the time of the adoption of the agreement, not now,\u201d he added.<\/p>\n

Uruguay\u2019s negotiations<\/h2>\n

A few days before the Mercosur summit, President Lacalle Pou announced<\/a> at a press conference that Uruguay had finalised the feasibility study with China over an FTA, a process that had begun in September 2021. The conclusion was said to be positive by the president.<\/p>\n

\u201cIn the coming days, our teams, together with the Chinese government teams, will formally begin talks for the FTA,\u201d added Lacalle Pou, who clarified that the feasibility study will not be made public because \u201cthere are elements of the negotiation in which we are not starting from identical positions.\u201d<\/p>\n

On a visit to Montevideo, the director-general for Latin America and the Caribbean department in China\u2019s Foreign Ministry, Cai Wei, said<\/a> that his country is open to negotiating an FTA with both Uruguay and Mercosur. \u201cChina is a firm supporter of free trade,\u201d he added. His remarks were reiterated<\/a> by a spokesperson for the country\u2019s Ministry of Commerce.<\/p>\n

Despite Fern\u00e1ndez\u2019s rhetoric that we can \u2018go together\u2019, both Argentina and Brazil have no interest in signing an agreement with China<\/p><\/blockquote>\n

Ignacio Bartesaghi, head of the International Business Institute at Uruguay\u2019s Catholic University (UCU) said that once the rounds of trade between the two countries begin, negotiations could be concluded within a year. However, he clarified that the deadlines will depend on the political will of both countries.<\/p>\n

\u201cUruguay does not refuse to move forward together, but it is known that, despite Fern\u00e1ndez\u2019s rhetoric that we can \u2018go together\u2019, both Argentina and Brazil have no interest in signing an agreement with China. Therefore, today the only option seems to be for Uruguay to move forward bilaterally and then the other members can negotiate with China,\u201d Bartesaghi added.<\/p>\n

Uruguay\u2019s FTA negotiations with China come at a good moment in the relationship between the two countries, which have already had a strategic partnership agreement in place since 2016. In addition, Uruguay was the first Mercosur country to join China\u2019s Belt and Road Initiative, which Argentina recently joined<\/a>.<\/p>\n

\"cows<\/a>
Read more: Uruguay plans to boost beef production and lessen its climate footprint<\/a><\/strong><\/figcaption><\/figure>\n

China is Uruguay\u2019s main trading partner, exporting mainly beef to the Asian country. In 2021, Uruguay exported a record US$9.8 billion, of which US$2.7 billion (28%) went to China, according to official figures<\/a>. Looking at the total exported, 45% was beef, 13% was cellulose products (including timber and pulp) and 12% soybeans.<\/p>\n

One of the first impacts that the signing of a trade agreement would have is the reduction of tariffs, which currently reach 35% for exports from Mercosur. This implies a reduction in the price of products exported from Uruguay, which could make them more competitive in the Chinese market.<\/p>\n

However, there are differences of opinion within Uruguay regarding the benefits and risks of an FTA. Former vice-president Danilo Astori argued<\/a> that a break with Mercosur would be the worst path for Uruguay, while Senator Guido Manini Rios, who is part of the current coalition government, said<\/a> that negotiations with China should take place within the framework of Mercosur.<\/p>\n

\u201cUruguay\u2019s timetable does not coincide with that of Mercosur, it is difficult for the same deadlines to be met,\u201d said Nicol\u00e1s Albertoni, a Uruguayan international analyst and consultant. \u201cWe should not think that China is going to save us, or that China is \u2018invading\u2019 us. It is the beginning of a negotiation within the framework of a desire for greater trade openness.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The recent Mercosur summit revealed strains in the bloc. As Uruguay moves for a free trade agreement with China, other members discuss consequences and call for unity<\/p>\n","protected":false},"author":3882,"featured_media":50056837,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[758],"tags":[50040720,561,595,600],"hashtags":[],"country":[20000110,50002602],"class_list":["post-50056817","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-geopolitics","tag-livestock","tag-soy","tag-trade","country-china","country-uruguay"],"acf":[],"yoast_head":"\nUruguay-China FTA negotiations raise tensions over Mercosur\u2019s future | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"The Mercosur summit revealed strains in the bloc. 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