US Senator introduced bill to extend trade benefits to Uruguay

The bill, introduced hours before Lugar met in Washington with Uruguayan President Tabare Vazquez, would include Uruguay in the Andean Trade Promotion and Drug Eradication Act, which is set to expire this year, his office said in a statement.

The Indiana Republican is among a group of Senate and House members who earlier this year proposed expanding the bill, intended to assist US anti-narcotics efforts, by granting duty-free access for exports from Paraguay. Both Uruguay and Paraguay have expressed frustration over Brazil and Argentina’s domination of the Mercosur trade block, of which they are junior members.

A June report prepared by Lugar’s staff recommends bypassing Mercosur common external tariff, which prevents members from signing individual free trade agreements, by granting trade privileges unilaterally to Uruguay.

Embracing Uruguay would send a “signal the US is not ceding its interests” in the region and “could encourage some heretofore reluctant countries to expand their trade relations with the US,” said the report, which was based on meetings with Uruguayan officials.

Foremost among them is Brazil, Latinamerica’s largest economy and a growing voice in international affairs, the report says.

The US dominant role as South America’s largest trading partner has been eroded in recent years. Trade with emerging economies like China and inter-regional trade led by Brazil keeps expanding. This year, China replaced the US as Brazil’s largest trading partner.