MercoPress. South Atlantic News Agency

Uruguay signs trade agreement with United States

Following months of negotiations the Uruguayan government signed Thursday a controversial trade agreement with United States in spite of dissent inside the left leaning ruling coalition over how far closer links with Washington will lead.

The so-called Trade Investment Framework Agreement, or TIFA, calls for a bilateral group on investments and commerce to meet at least once a year to identify areas of future trade liberalization. Uruguay is the first South American nation to sign a TIFA with the United States, a format Washington has used to expand trade ties with several African and Asian partners. A Uruguay/US joint investment treaty was signed earlier this decade when the country was ruled by a center coalition. Deputy U.S. trade representative John Verbena joined aides to President Tabare Vazquez and Uruguay's Economy Minister Danilo Astori in signing the agreement at the ceremony at Government House in Montevideo. "In the world we are living in today, investment and trade go hand-in-hand with expansion and the creation of new opportunities" said Uruguay's Economy Minister Danilo Astori. However in a message to the ruling coalition, and Mercosur partners with which Uruguay has had difficult relations lately, Astori underlined that "whatever follows (TIFA) we don't know, nor can we anticipate, or announce or discard". He insisted that "now we must let the ink dry and start workingâ€Ã‚¦whatever comes later, we will consider step by step". Astori's original target was a free trade agreement, but in spite of the advanced negotiations and support from President Tabare Vazquez, he had to yield to a solid rejection inside the ruling coalition which also had the support from Mercosur senior partners. Brazil and Argentina firmly reminded Uruguay that any decision of such nature, political or trade relations with third parties needed the block's consensus. Uruguay and the other Mercosur junior partner Paraguay are bitterly complaining that the block has become a two members' club, who decide for the rest and limit access to their markets. Faced with this scenario both countries have been looking for outside partners and in the last Mercosur summit, following on Brazil's initiative, were granted access to credits from a 100 million US dollars structural promotion fund. However another Brazilian proposal to ease junior members' market access and dilute certain tariffs requirements was blocked by Argentina. Actually Thursday mid day the TIFA signing ceremony was delayed over half an hour because Uruguayan officials had to face a work stoppage from Government House personnel claiming back pay and outside the building a group chanted anti Bush slogans and burned a US flag. Communists and other radical factions in the left-wing coalition in Vazquez's government have accused the president of seeking to cede national sovereignty to the United States in exchange for a trade deal. The US delegation was made up of John Veroneau; Everett Eissenstat, Deputy Trade Representative for the Americas; Susan Cronin, Southern Cone head of the Trade Representative and Frank Baxter, US ambassador in Uruguay. The orthodox team of Minister Astori with a pragmatic approach is working hard to expand Uruguay's trade, attract investments and help boost long term the economy of South America's smallest country, which is still recovering from a dramatic 2001/02 economic meltdown that spilt over by recessions in neighboring Brazil and Argentina. Although Astori had to back down from his original target, he has told the business community in Uruguay and foreign investors that TIFA is the first step towards expanding trade opportunities with the US, which will eventually lead to a full free trade agreement. Bilateral trade between Uruguay and United States in the 12 month period ending November 2006 reached over 880 million US dollars. Uruguay to the US sells mostly beef, meat products and leather goods. The US is Uruguay's main trade partner behind Brazil and Argentina.