President Lacalle Pou is pushing for a free trade agreement, but Paraguay is the biggest obstacle.
President Luis Lacalle Pou summoned authorities from across Uruguay’s political spectrum yesterday to brief them on the progress of negotiations with China toward a foreign trade agreement. The news was completed on Wednesday when, at a press conference, the Uruguayan president confirmed that the People’s Republic of China had made a formal offer to begin the pre-feasibility analysis — that is, the first step toward a free trade agreement between the two countries — and this shook up Mercosur.
“The president convened this meeting to provide relevant information on the latest progress regarding trade agreements with third countries, in particular with the People’s Republic of China”, reads the official statement. “The president and the national government have expressed on different occasions Uruguay’s pro-openness vocation and the need to conclude trade agreements with the purpose of generating opportunities for progress for the country”, it added.
Diplomatic sources confirmed to LPO that the team of Uruguayan Foreign Minister Bustillo contacted the Argentine Foreign Ministry and gave it advance notice of this meeting to avoid speculation and misunderstandings. And while it is a sign of pro-openness progress that already marked a counterpoint with Solá, the biggest differences on this point are not with Argentina, but with Paraguay.
Meanwhile, Bolsonaro shares Lacalle Pou’s vision of greater integration with the world but faces resistance within Itamaraty, which defends a more moderate stance that would not damage the relationship with Argentina. As LPO reported, a senior Brazilian official distanced himself from the Uruguayan position and defended the use of the South American bloc’s negotiation mechanisms.
And although Argentina does not want to consider further trade openness due to the foreign currency shortage it faces, the main stumbling block for a Mercosur-China agreement is that Paraguay formally recognizes Taiwan as an independent country and as such has a conflict with China, which is a problem that goes beyond Mercosur.
The other relevant point of this bilateral progress is the view of the United States, with a structural wariness toward the advance of the Silk Road in the Southern Cone. To some extent, Paraguay’s position coincides with that of the United States with regard to Taiwan and China.
Indeed, in the context of vaccine procurement to fight the pandemic, the United States, India and Taiwan innovated with the Indian vaccine Covaxin to prevent Paraguay from signing agreements for some of the Chinese doses.
But now it finds itself facing a Uruguay — historically closer than Argentina and Brazil — promoting the bilateral relationship with China.
Argentina, on the other hand, needs the green light from the North to close a deal with the Monetary Fund, which has already put a strain on Kirchnerism’s long-standing closeness to the Silk Road, and Alberto Fernández has been deepening ties with the Biden administration. So, for the time being, the current situation will show both countries with their historical alignments reversed.
Within the Argentine government there is optimism, and officials suggest there will be a debate on good terms among the bloc’s partners to address this situation and avoid divisive positions. However, in parallel, they recall that as a Senator, Lacalle Pou criticized Tabaré Vázquez’s Foreign Minister, Rodolfo Nin Novoa, in 2017 in a similar discussion involving China.
At the time, the man who is now President of Uruguay argued that “one had to negotiate with Mercosur’s endorsement or face the consequences”.
Source: La Política Online
