MercoPress. South Atlantic News Agency

Uruguayan cabinet divided over how to address Argentine trade restrictions

Vice-president Danilo Astori described Argentina’s attitude as “imperialistic”

The latest round of imports’ restrictions imposed by the government of President Cristina Fernandez and how to address them have triggered a serious debate inside the ministerial cabinet of Uruguayan president Jose Mujica.

According to the leading Montevideo newspaper based on reliable government sources, while President Mujica insists in negotiating with Argentine the trade restrictions, “in spite of the hostility from the K government”, Vice President Danilo Astori is more critical and questions that approach.

Last Monday the Mujica cabinet discussed over five hours the impact of Argentine measures on Uruguayan exports and the overall protectionist attitude of the Argentine government. And even when Mujica ratified the dialogue path and negotiations, Astori and Economy minister Fernando Lorenzo disagreed and even questioned the solidity of the current Argentine economic model.

Astori stated that Argentina’s attitude was ‘imperialist’ and said that the CFK administration blockade was similar to that of the fifties under then President Juan Peron, and when trade hostility was most intense, far distant from the ‘reconciliation’ of the nineties when the Mercosur block was launched.

However Mujica argued that if the Argentine option does not work, he plans to travel to Brasilia and try to convince President Dilma Rousseff to take the leadership of the Mercosur block. “Brazilians overall have been more lenient and aware of our situation”, said the Uruguayan president

But in the meantime Mujica and Foreign Affaire minister Luis Almagro believe negotiations must follow the same track as up to now since not only trade is at stake, but also the huge Argentine investment in tourism, real estate and the construction industry.

Almagro together with Industry minister Roberto Kreimerman presented a report on the impact of Argentine protectionist measures and underlined the “expansion of goods and service exports to Argentina in 2011, particularly the auto parts industry” with a strong percentage of added-value.

Other ministers questioned the real significance of tourism since contrary to official stats most operators feel this summer season has been notoriously weaker than a year ago mainly because of the foreign exchange restrictions imposed by the Argentine government that severely limits the purchase of foreign currency.

In Argentina domestic tourism has broken all records so far this summer with 5.8 million people visiting the resorts along the Atlantic coast.

Finally Mujica said he will wait the evolution of the bilateral trade situation, and how Argentine measures impact on Uruguayan exports, and ultimately will fly to Buenos Aires for a meeting with Cristina Fernandez. In the meantime the Uruguayan government will continue to negotiate ‘case by case’ the asymmetries and work on a long term mechanisms to have Mercosur members excluded of Argentina’s trade wrath.

The cabinet spokesperson was Agriculture and Livestock minister Tabare Aguerre who described Argentine measures as “distortions” and quite distant from what was expected “when Mercosur was first put to roll”. For the government the issue is of ‘utmost hierarchy’.

The latest Uruguayan official stats show that Argentina has dropped behind Brazil and China as the main trade partner for the country’s exports. However Argentina has become Uruguay’s main supplier.