Deep divisions in Mercosur’s trade policy were exposed at a South American customs union summit on Thursday, as Uruguay insisted on a plan to continue its own trade deals, in defiance of the strategy of bloc negotiation advocated by Argentina and Paraguay.

“We believe that the way is to respect the Treaty of Asunción: to negotiate with third countries or blocks and to respect the figure of consensus as a basis for decision,” reacted President Alberto Fernández at the summit on Thursday. “In our integration process, no one is saved alone”.

Uruguay will remain in Mercosur and its decision to sign bilateral trade agreements is in line with the bloc’s rules, said President Luis Lacalle Pou, whose father was one of the founding leaders of the customs union in 1991.

“It does not mean breaking or breaking the rule of consensus,” he said. “Uruguay wants to move forward with Mercosur. Together, we have more strength, more dimension and power to negotiate with the world. “

Technical failures clouded the summit which moved away from the traditional format in which the host country broadcasts all presidential speeches, leaving each country to find its own solution. As a result, Lacalle Pou’s speech lacked audio and that of President Mario Abdo Benítez of Paraguay was not even broadcast live to the public.

New strategy

Lacalle Pou’s new trade strategy upset three decades of Mercosur consensus after Uruguay’s proposal to allow members to negotiate deals, individually or as a group, did not garner broad support. A parallel move backed by Brazil and Uruguay to reduce Mercosur’s common external tariff also failed at this week’s summit in which Argentina ceded the bloc’s six-month pro-tempore presidency to Brazil.

“We cannot allow Mercosur to continue to be seen as synonymous with inefficiency, wasted opportunities and trade restrictions,” said Brazilian President Jair Bolsonaro, who did not endorse Lacalle Pou’s plan.

Fernández is resisting exposing Argentina’s fragile economy, hit by three years of recession and double-digit inflation, to increased foreign competition. Tensions between Mercosur reformers and defenders of the status quo sparked an awkward moment in March when the Peronist leader suggested Uruguay should leave Mercosur if he was not happy.

Moreover, it is the lax protection of the Amazon rainforest by Brazil, and not the protectionist instincts of Buenos Aires, that is holding back the historic free trade agreement that Mercosur and the European Union concluded two years ago. years. The EU refuses to sign, let alone ratify, the deal until Mercosur addresses its environmental concerns.

Uruguay, for its part, is keen to conquer new markets for commodities such as soybeans, beef, dairy products and forest products which constitute the bulk of its exports. Local journal Busqueda reported Thursday, citing unidentified government sources, that the administration was seeking a free trade deal with China.

“We are going to have trade relations with China as much as possible,” Lacalle Pou said at the Latin America Freedom Forum last month.

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by Ken Parks, Jorgelina do Rosario & Simone Preissler Iglesias, Bloomberg

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