MercoPress. South Atlantic News Agency

Uruguay could reconsider links with Mercosur given obstacles to inter-trade

“We’re not China, far from it, complained President Mujica”

Uruguay is reconsidering the situation and links with Mercosur, given the recent trade obstacles and tariffs imposed by Mercosur senior partners Brazil and Argentina, announced President Jose Mujica in an interview.

“If we are the same as any other country outside Mercosur, we have to reconsider a few things” said Mujica who anticipated his intention of contacting Presidents Cristina Fernandez and Dilma Rousseff to address the situation.

Last week Brazil announced a tax hike of 30% on the import of cars, including those from Mercosur unless they comply with certain specific component content request.

The Brazilian initiative includes cars, tractors, buses, light trucks, trucks and light trucks and will be enforced until 31 December 2012.

To avoid the extra tax car manufacturers or assembly plants in Mercosur will have to prove they include at least 65% of regional contents. Exempt are those manufacturers who invest in technology and manufacture most parts in the block such as upholstery, painting, engines, transmissions, clutches and other up-the-ladder auto parts.

The Brazilian decision has a direct impact on Uruguay’s 15.000 vehicles exported annually to Brazil, with a value of 150 million dollars and over 1.000 jobs.

President Mujica reacted saying the Brazilian decision generated some ‘chill down my back’ and later Deputy Foreign Affairs minister Roberto Conde announced the beginning of talks “hopefully with the spirit of Mercosur very much present”.

Meanwhile one of the assembly plants with Chinese capital said it was temporarily closing down. The Uruguayan Chamber of Auto industries said that besides EFFA two other companies with Chinese and Korean interests have also been notified.

The three companies work mostly for Brazil.

“We’re not China and we are far from that, we are insignificant, we fit in a Sao Paulo neighbourhood “, said President Mujica.

“We know that to a certain extent China can force the collapse of some big ones, but Uruguay can not even collapse Livramento” in reference to a small Brazilian border town next to Uruguay.

Likewise the Chamber of Commerce claimed that exports to Argentina are falling drastically because of protectionist measures implemented by the administration of President Cristina Kirchner, the last of which refers to the paper, Kraft and editorial sectors.

In the latest Mercosur summit in Paraguay Mujica defended the need to expand Mercosur with the definitive incorporation of Venezuela, probably Ecuador and at the same time criticized other Latin American countries for being too inclined to create ‘integration organizations’.