MercoPress. South Atlantic News Agency

Mujica says Mercosur is “a chewing gum”; promises trade deals with third countries

Almagro admitted Argentina openly violates the basic principles of Mercosur

Mercosur from a real point of view exits, but institutionally it’s a “chewing gum” claimed Uruguayan president Jose Mujica who anticipated he would demand from the block’s partners that Uruguay be allowed to sign bilateral trade agreements with third parties.

In a long interview with a pro-government Montevideo weekly Mujica added that “if nobody respects agreements, we are not obliged to respect them. Further more, it sounds ridiculous to protest and claim if others don’t listen”.

Mujica said that the trade situation among Mercosur members continues to be paralyzed and “I’m determined to assure agreements with other countries and when they come to complain, we’re going to tell them they shouldn’t be scared with what we have done”.

“One goes in hand with the other” said Mujica underlining that Uruguay urgently needs “to diversify and take advantage of the current situation”. Although he cautioned “we must act with intelligence, it’s hard to deal with our River Plate neighbours”.

Uruguay and Paraguay, junior members of the Mercosur block have been suffering the consequences of the so called “strategic alliance” between senior members Brazil and Argentina, which has become an obsession for Brasilia. The rich farming country which until a couple of decades ago openly disputed with Brazil the leadership of the continent now has an economy and foreign trade that has become virtually “Brazil-dependent”.

This in practical terms means Uruguay and Paraguay are not treated as “equals” and are exposed to the whims of Argentina and its trade and budget problems (legacy of the massive 2001 default) but which Brazil considers with unending patience and compromise.

The latest round of measures implemented on February first, by Argentina to curtail imports by demanding a previous sworn statement has again created bottlenecks and delays, and even complaints from Argentine manufacturers who fear lack of imports could affect production.

As in previous occasions Argentina has promised to yield and ease the rulings for Mercosur partners, and apparently this is happening. But since February two Brazilian delegations have visited Argentina, one private from the powerful Sao Paulo federation of industries, and a second official including the Foreign Trade secretary.

Uruguay and Paraguay were preparing delegations to visit Buenos Aires with the same purpose, but were cancelled at last moment allegedly because Argentine promised and ‘effectively’ liberated many retained imports.

The Chilean congress has also asked the administration of President Sebastian Piñera to look into the matter and make an official complaint about the ‘inconveniences” to bilateral trade, to Cristina Fernandez administration.

The Argentine media reports that out of a total of 16.000 imports’ sworn statements presented so far, 4.600 have been approved (mostly for less than half a million dollars) while 2.900 have been questioned.

Before Parliament, Uruguayan Foreign Affairs and Industry ministers, Luis Almagro and Roberto Kreimerman, summoned by the Standing Committee said relations with Argentina are ‘good’ but admitted that the government of Cristina Fernandez openly violates the “basic principles” of Mercosur.

Nevertheless Almagro defended the ‘dialogue’ focus from the Mujica administration and said that “firmness” has never been missing in dealings with Argentina.

Almagro revealed that the non automatic licences implemented by Argentina are impacting on several local manufacturing sectors: textiles, clothing and footwear, car and auto-parts, metal engineering, machinery, paper and pulp, furniture, home appliances, bicycles and motorcycles”.

However the head of the main opposition party, Senator Alberto Heber twitted that he would insist with sending an official delegation including government and private sector, (management and unions) representatives to Buenos Aires since “now we depend on the humour of Mrs K”.

“Argentina has announced a solution for previous restrictions (non automatic import licences), but what about current ones and in the future?” asked Heber.

Meantime the head of Uruguay’s Chamber of Industries, Washington Burghi said he welcomed the latest announcement from Argentina, but warned that what the “Cristina Fernandez administration has done is to give as a few crumbs and a bone to chew; that’s all”. He added “this has happened before when the complaining gets too rough”.

Under Secretary for Economy Luis Porto admitted the impact of the Argentine measures but minimized the dispute: “it’s not a big problem, it’s a little problem; the delays involve 10 million dollars out of total exports last year in the range of 588 million dollars”.

Porto also called for prudence given so many other areas such as services and investments where Argentina is crucial for Uruguay and “let’s not forget the Argentine measures are not targeted against Uruguay but refer to all countries trading with Argentina”.