MercoPress. South Atlantic News Agency

Uruguay and Paraguay meet to talk about Mercosur, ports and energy

Horacio Cartes was in Montevideo last March when the inauguration of President Tabare Vazquez

Mercosur, ports, energy, trade are among the issues in the agenda that Paraguayan president Horacio Cartes will consider with his counterpart Tabare Vazquez when he makes a one day visit on Thursday to Montevideo, according to the Uruguayan ambassador in Asunción Federico Perazza, ahead of the meeting.

 Mercosur has been in the group's agenda since Brazil changed its stance and now openly supports a more flexible group, which would enable its members to sign bilateral treaties with third parties. This in fact is currently banned by a resolution from 2000 that forces all members to negotiate under consensus.

Junior partners Uruguay and Paraguay have always supported an open, flexible Mercosur, 'leaving aside the cage' while Argentina and Brazil always insisted on a group formation which forced negotiations with third parties to be submitted to other members.

However since Brazil is in recession and desperately needs to increase exports, business and investment opportunities, it changed its position and is trying to conclude the ongoing negotiations with the European Union for an encompassing cooperation and trade agreement, which took off in 1999.

In effect that was the official stance at the recent summit in Brussels, where Mercosur members, except for Argentina, argued that if necessary a flexible block, at a 'two-speed' negotiation could be implemented. Argentina would join in later once it puts its house in order.

But despite the good will, and support from leading nations such as Germany and Britain, several EU countries were not ready or willing to advance with an exchange of proposals, list of goods and services for lowering tariffs, since they fear competition from Mercosur agriculture and Europe is still lagging in growth and in jobs' creation.

Thus it was agreed that in the third quarter of this year Mercosur and EU would exchange proposals with the list of goods and services to consider for tariff reductions. If this works out as planned it means the overall agreement will inevitably have to wait until 2016 for a formal signing ceremony.

Paraguay is also interested because next July at the Mercosur presidents summit in Brasilia it will be taking over the group's chair from Brazil, and will in effect be in charge of negotiations with Brussels.

The other issues in the agenda refer to ports, which is essential for Paraguay, since as a landlocked country to have access to the high seas it must necessarily sail along the Parana river which crosses Argentine territory.

Likewise with trade, that must also sail up the Paraná river and Argentine authorities on occasions come up with some extraordinary rules. Finally power, Paraguay is one of the few countries in the world with surplus electricity from two giant dams which it shares with Brazil and Argentina.

Uruguay has always been interested in having access to Paraguayan power at peak moments, but the high voltage lines would have to cross Argentine territory, and the toll pretended by Buenos Aires, so far has made the business non profitable.

Although not in the official agenda, Cartes and Vazquez will obviously exchange ideas about the electoral landscape in Argentina leading to the October ballot and the stepping down of President Cristina Fernandez in December, which does not seem to be the end of rude obstructive Kirchnerism towards its neighbors, rather the contrary, particularly if as opinion polls indicate her chosen candidates take the day.