Uruguay threatens to downgrade Mercosur role
Financial Times (London)
Uruguay threatens to downgrade Mercosur role
By Benedict Mander in Montevideo
8/3/2007
Uruguay has warned that it will consider downgrading its status in Mercosur if the regional trade bloc prevents it from making a bilateral trade deal with the US.
Danilo Astori, trade minister, said : "Uruguay must find a way of making a bilateral trade deal with the US. Our small country is trapped, a prisoner of the collective wishes of the group, and this is causing us serious harm."
As part of a tour of Latin America, President George W. Bush arrives on Friday in Uruguay. Montevideo will push for a deepening of trade ties after signing a trade and investment framework agreement with the US last month.
But a full trade deal agreement is opposed by Mercosur, which requires members to negotiate such deals collectively.
Mr Bush’s visit to Uruguay follows that of Brazil’s president, Luiz Inácio Lula da Silva, last week, in which he showed a willingness to help improve Uruguay’s trade terms in Mercosur and allow greater flexibility for it to make bilateral trade deals outside the bloc.
Although Mr Astori would be willing to negotiate bilateral deals together with the rest of Mercosur, "we see no willingness in the other members to do so". After 12 years of trying, no agreement had been reached between Mercosur and the European Union, he said.
Mr Astori said there was much at stake. "It is a matter of life or death for entire sectors of our economy."
Uruguay, with Paraguay, complains that Brazil and Argentina, the largest members, have prevented access to their markets, deepening its trade deficit.
For now, Uruguay wants a waiver to make bilateral deals outside the bloc while remaining a full member.
If that is not possible, however, Mr Astori would not rule out downgrading to partial membership — such as that of Chile, which has made a series of trade pacts.
In particular, Mr Astori worries that Argentina will continue to be less willing than Brazil to allow Uruguay to negotiate bilateral deals. "There are notorious difficulties with our relationship with Argentina. That, of course, is where the principal problems lie," he said.
Indeed, at the same time as Mr Bush visits Uruguay, Argentina has permitted Hugo Chávez, Venezuela’s president, to lead an explicitly anti-Bush rally on the other side of the River Plate in a Buenos Aires stadium.
