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Uruguay's FTA ambitions upset South American trade bloc

By Fabian Werner

MONTEVIDEO (Reuters) – South America’s main Mercosur trading bloc, which includes regional powerhouses Brazil and Argentina, is under pressure from one of its smaller members. Uneasy in Uruguay, the bloc seeks to reach its own free trade deal, the leaders said at a summit on Tuesday.

At a meeting in the Uruguayan capital Montevideo, leaders sought to pressure their hosts over a go-it-alone trade plan to deal with China and the Trans-Pacific Partnership (TPP).

“The solution is not for each of us to do our own thing,” Argentine President Alberto Fernandez said, berating Uruguay.

Uruguay, one of South America’s smallest economies, has been trying for years to conclude a unilateral trade agreement it believes is more beneficial than Mercosur.

“Uruguay needs and has the ambition to open up to the world. Of course, it would be better if we go together,” said Uruguayan President Luis Lacale Pu. “We will have more negotiating power.”

In July, Uruguay entered into formal negotiations with China on a free trade agreement, a decision criticized by MERCOSUR members and more recently in negotiations progress in joining the TPP.

In late November, Brazil, Paraguay and Argentina formally warned Uruguay that they may take “measures” if Uruguay goes ahead with its plans.

Paraguayan President Mario Abdo Benitez said Mercosur integration was “fundamental and strategic” but said the flexibility requested by Uruguay would not Push forward with trade deals without informing other countries.

“I’m satisfied with what I’ve heard from Racale. They can make progress in the dialogue, but before any kind of progress is done, They will be shared with the bloc. This is an acceptable path,” Abdu said.

The Montevideo meeting, where Uruguay handed over the interim presidency to Argentina, ended without a joint statement on the agreement the two countries had reached.



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