MercoPress. South Atlantic News Agency

Lula and Vázquez inaugurate malt plant.

Uruguayan president Tabare Vazquez in his second day of government inaugurated Wednesday, together with Brazilian president Luiz Inacio Lula da Silva a new malt plant in the city of Paysandu belonging to the Brazilian company Ambev.

The new malt plant was the solution found to a serious labour dispute in Paysandu, 300 miles north of Montevideo, when Ambev which ended absorbing Uruguay's three breweries over a year ago decided to concentrate activities in two plants.

The labour conflict also involved the city's mayor Alvaro Lamas who complained before the Uruguayan parliament about the "monopolistic" situation created by Ambev, -- even when the three beer brand names were respected--, and the potential joblessness Paysandu was facing if the local plant was finally shut down.

The local trade union contacted their Brazilian counterparts and reported the situation to President Lula da Silva, a former metal workers trade union leader.

"Another victim of globalization", remarked the Uruguayan and Brazilian unions.

The malt plant expansion represents a 37% increase totalling a processing capacity of 130,000 barley tons a year and demanded a five million US dollars investment.

President Vazquez said that the new plant was an example of his government's commitment to creating jobs, as he had promised during his electoral campaign.

President Lula da Silva spoke of the new "regional syntony" which the plant represented and promised to facilitate the increase of bilateral trade with Brazil.

"Integration without hegemony is my government's target for Mercosur and the South American community", stressed Mr. Lula da Silva.

Uruguayan exports have repeatedly encountered difficulties in accessing the Brazilian market particularly regarding agriculture products given the strong farm lobbies in southern Brazil which in many areas is a direct competitor of Uruguay.

Brazilian brewer Ambev, a subsidiary of Belgian-Brazilian InBev makes beer in Brazil, Uruguay, Paraguay, Argentina, Venezuela, Ecuador and this week announce it's moving into the Dominican Republic with a 100 million US dollars investment for the production of one million hectolitres of beer annually.

Among other brands, Ambev makes Brahma, Antarctica, Skol and Beck's.