MercoPress. South Atlantic News Agency

Uruguay reviewing links with Mercosur

Given the mounting difficulties with Mercosur Uruguay is quietly considering different options for different scenarios including the possibility of abandoning the South American customs union, revealed the Uruguayan press in Montevideo.

"For the current Uruguayan government Mercosur is a strategic priority and we are looking forward to a larger and better Mercosur, not the one we have now plagued with difficulties. Uruguay wants a Mercosur that fairly contemplates all countries, no matter the asymmetries", said Vazquez Wednesday in Caracas during a meeting with President Hugo Vázquez.

"Since last May dialogue with Argentina has been virtually paralyzed. The losses we're experiencing because of the pickets blockading the international bridges between Uruguay and Argentina can be estimated in over 200 million US dollars", added the Uruguayan president.

However before leaving for Chile President Vazquez allegedly left precise instructions for the consideration of other options including closer trade and eventually political links with United States.

A first option would be to insist on a better deal from Brazil and Argentina for Mercosur junior members, Uruguay and Paraguay. Currently Uruguay is blocked by land from Argentina by pickets and to the east, Brazilian farmers have successfully lobbied to prevent Uruguayan rice from entering the country.

A second option would be to follow the Chilean experience. From the very beginning Chile made a clear cut between the political and trade fields. Full support for a strong Mercosur in world forums but given its more ambitious tariff and open economy policies it never joined the trade agreements.

Finally abandon crisis plagued Mercosur and look for more practical options such as trade agreements with United States, currently under consideration, with China, India and the European Union.

"We're undergoing a disintegration process, not an integration process. On one side the bridges conflict and on the other the giant locks us out with our rice exports. This is not the kind of Mercosur we ambition", insisted President Vázquez.

This is not the first time Uruguay has considered extra-Mercosur options particularly given the trade impediments regularly imposed by the larger partners, following on strong internal lobbying in Argentina and Brazil. The Brazilian press refers to Uruguay as the "grumpy" member of the block.

When Mercosur was surging in the late nineties almost half of Uruguay's trade was with its two large neighbours. Since the Brazilian crisis of 1999 and the melting of the Argentine economy in 2001/02, the percentage has dropped to 20% and Nafta countries (United States, Canada and Mexico) have become the main trading partners.

In his recent visit to Chile for the inauguration of Chilean president Michelle Bachelet, Vazquez met with US Secretary of State Condoleezza Rice and later underlined that "a free trade agreement with United States was not in the agenda".

"With protectionist policies we can't advance towards a free trade agreement, but this does not mean we can keep advancing to increase bilateral trade with United States", added the Uruguayan President.