MercoPress. South Atlantic News Agency

Uruguay brokers one-on-one free trade deal with China hoping it will not affect Mercosur

“We weren't willing to stay put if the others didn't move forward,” Lacalle said

Uruguay's President Luis Lacalle Pou Tuesday announced his country had begun negotiations with China to reach a Free Trade Agreement (FTA), which has been regarded as the beginning of the end of Mercosur.

The President summoned representatives of all political parties with parliamentary representation over to the Executive Tower to convey the news to them and explain that a formal positive response had been received from the Chinese government. 

Lacalle stressed that the issue went beyond one government and was rather a state policy that, if achieved, would transcend his term in office. Hence the call for all political forces to be represented.

The president insisted on Uruguay's historic willingness to belong to Mercosur and, at the same time, to expand its borders.“This government has for a long time manifested its intention to advance towards the world with all Mercosur partners, but at the same time, it has been said that if it was not possible, Uruguay would try,” he said.

“We always said that Mercosur has more negotiating power as a whole, but we were not willing to stay put if the others do not advance,” Lacalle went on.

The Uruguayan President also pointed out the government of Argentina had been told about the latest developments. Lacalle and his Argentine colleague Alberto Fernández had argued during a Mercosur virtual summer earlier this year but both leaders met last month face to face in Buenos Aires to mend things up.

In this scenario, Lacalle hoped his government's new steps would not affect bilateral relations with Argentina and explained that parliamentarian approval from the other Mercosur countries was not needed for Uruguay to sign this treaty with China.

The next step for the FTA negotiation is the completion of the feasibility study, which China hopes to have soon before the end of the year. “Uruguay is in a hurry because each day that passes is a day wasted,” said Lacalle Pou, but added that rush cannot lead to mistakes.

“We will see who are the winners and losers in this agreement and if there are compensatory measures,” Lacalle added.

Upon leaving the meeting Senator Guido Manini Ríos of Cabildo Abierto said: “My opinion is that the titles are not the centre of the question, but what this treaty contains, let's hope and have confidence.”

Former President Julio María Sanguinetti highlighted China's willingness to start a negotiation with Uruguay, “which is not only a message for us but also Mercosur.”

“This is a very important step because of what China means, politically for us, and this does not in any way mean the will to go into a fractured situation with Mercosur, but rather to keep the dialogue open,” Sanguinetti added.

China is the main destination for Uruguayan exports. In the first eight months of the year, sales totalled US $ 1,568 million, 63% more than in the same period of 2020. The main export product was beef, which grew 205% and accounted for 60% of Uruguay's total exports, according to an Uruguay XXI report issued last week.

Last month, exports to China amounted to US $ 233 million, which meant a growth of 52% compared to the same month of 2020.