Uruguay criticizes Mercosur for shortcomings in trade and infrastructure
One day after the summit in Montevideo, Uruguay criticized the functioning of Mercosur, particularly the lack of cooperation, trade barriers and impediments and delays to essential infrastructure works for the group.
Vice president Danilo Astori addressing a group of business leaders talked about the challenges for Uruguay in 2012 and emphasized on the need to overcome barriers to regional trade, particularly from senior members Argentina and Brazil, and the construction of infrastructure.
Astori specifically mentioned the dredging of rivers, the construction of waterways, power inter-connection with Brazil and Paraguay and the provision of natural gas from Bolivia.
“We must admit that bringing natural gas to Uruguay faces growing obstacles and increasing delays at regional level are notorious”, said Astori. Something similar happens with the project to supply Uruguay with Paraguay’s surplus power, stalled by Buenos Aires since it would demand using the Argentine grid.
“Latinamerican integration is seriously hurt and much more than in the past. We have less attitude and less mechanisms for internal cooperation. We need a lot of patience and work to recover it and make it solid”, he added.
Astori revealed that in this week’s summit Uruguay accepted the Brazilian proposal for an increase of the goods and products excluded from the common external tariff in exchange for automatic import licences for Uruguayan produce to have access to the Argentine and Brazilian markets.
“That was our line of defence because we are concerned with Uruguayan exports to the region and the need to eliminate that excess of all kinds of obstacles” said Astori when questioned about Uruguay’s position in the last summit particularly since Montevideo is involved in a long term policy to further lower tariffs.
Nevertheless Astori insisted the Uruguayan economy is open and for years now “we have been signing treaties with relevant countries to promote investments and eliminate double taxing”.
He added “this has been so not because of demands imposed but rather it has been a long term policy of the country and underlined that treaties for the exchange of tax information will only be signed if double taxation is eliminated.
The statement was in direct reference to current talks with Argentina to agree on tax transparency and information exchange. However, Buenos Aires does not accept the double taxation clause which would mean billions of dollars from Argentines invested or deposited in Uruguay would be exposed to a double burden.
The Vice president also referred to recent achievements by Uruguay: economic growth over 6%, a 20% increase in the value of exports in 2011 and the recent restructuring of 2 billion dollars of Uruguayan foreign debt, extending maturing periods and abandoning dependency of the US dollar.
Finally Astori linked the good performance of the Uruguayan economy to international markets confidence in the country and discarded point blank any changes to the rules of the game, and called on all political and social sectors “not to leave the government alone in the crucial task of building international confidence”.
However the business community expressed concern about Uruguay’s education system and its declining results, and what it considers as excessive rates of income tax.
Astori admitted the poor results of the education system and the need for reform now, with no delay. “We must discuss and reconsider the autonomy which the different sectors enjoy, (particularly secondary and tertiary education) but which to not follow or comply with a national educational objective”.
Regarding taxing Astori said that the government’s policy is guided by the concepts of “fairness and justice” and pointed out that the introduction of income tax in Uruguay was not ‘temporarily’ but a structural reform.
Vice-President Astori claims there is lack of cooperation from country members