MercoPress. South Atlantic News Agency

China interested in a trade agreement with Mercosur reveals Uruguay

Uruguayan Foreign Minister Luis Almagro said a task group will study the feasibility

China has offered Mercosur to consider the possibility of negotiating a free trade agreement revealed Uruguay, when the South American block is going through one of its worst moments ever so distant from the integration process pledges of 1991.

Beijing talked about the possibility during a recent visit of Uruguayan officials to China to promote trade and investments. China is Uruguay’s second trade partner and a leading associate for most of South American countries rich in commodities and minerals.

“They have proposed creating a task group to look into the feasibility of a Mercosur China agreement”, said Foreign Affairs minister and former ambassador in China, Luis Almagro.

In South America the only two countries with trade agreements with China are Chile, since 2006, and Peru in 2010.

But Uruguayan experts in international commerce believe the chances of reaching a trade agreement with China are remote given the promotion policies to benefit domestic industry mainly in Brazil and Argentina, the two major partners of the block; promotion that in the case of Argentina has received a formal complaint from the EU before the World Trade Organization.

Besides Paraguay has no diplomatic relations with Beijing and has just recently ratified links with Taiwan during an official visit to the island by President Fernando Lugo. Taiwan as well as several Central American countries receive massive aid from Taipei and are reluctant to break off from Taiwan which Beijing considers a “rebel province”.

Mercosur is also going through a difficult moment given the different economic policies applied by Argentina in contrast to the other three members, although Brazil has lately moved closer to the government of President Cristina Fernandez applying incentives to local industry and depreciating the currency to prop exports.

A further major dispute is anticipated in the coming Mercosur summit in a few weeks time when Argentina’s proposal to increase the external common tariff has to be discusses and agreed. Brazil has already anticipated it is going to up tariffs on several items which allegedly are highly subsidized overseas.