Lacalle Pou to seek Uruguay's joining TPP

Monday, November 21st 2022 - 10:26 UTC

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Joining the TPP would represent more for Uruguay than an FTA with China alone, it was reported

Uruguayan President Luis Lacalle Pou announced his country would apply to join the Trans-Pacific Partnership, in a move to have access to more competitive tariffs, which has caused a stir with Mercosur and could jeopardize other negotiations with China, it was reported.

Lacalle will send Uruguay's letter of accession to the Trans-Pacific Partnership Agreement (TPP), a free trade agreement between countries in the Americas, East Asia, and Oceania, which account for 13% of the world's GDP, on December 1, according to Montevideo sources.

The President is said to have conveyed his intentions to opposition leaders during a meeting Friday. Joining the TPP would mean opening up the path the government has been seeking since its inauguration in 2020, according to Uruguayan analysts.

There are 11 signatory states to the Trans-Pacific Partnership: Canada, Mexico, Peru, Chile, Japan, Australia, New Zealand, Malaysia, Singapore, Vietnam, and Brunei. Between 2016 and 2017, the bloc was also formed by the United States, but the latter pulled out under President Donald Trump.

The members participating in the TPP count on strong tariff reductions among them to encourage multilateral trade among the signatories. Uruguay's accession could represent a great opportunity to increase exports of raw materials to the rest of the world.

Much of Uruguay's beef production is sold to Japan, where it enters with an average 30% tariff pressure. Lacalle has been in Tokyo recently discussing business opportunities.

Lacalle's TPP decision could spark new rifts with Mercosur and also with China, with which a Free Trade Agreement (FTA) is being negotiated.

Currently, Uruguay has access to around 8% of global trade. With the agreement with China, this percentage would rise to over 20% and, with the TPP, to 40%, according to Buenos Aires' Ambito.

Lacalle's announcement came one day after Beijing delayed the final stages of these negotiations to give “more time” to the reorganization of its working team.