Regional trading bloc Mercosur’s heads of state summit on Thursday once again revealed divisions between members on the common external tariff and trade agreements with third parties. While Brazil and Uruguay have for months pushed for Mercosur to be made more flexible, Argentina has said that a relaxation of the bloc’s policies would render the grouping meaningless.
During the meeting, Argentine President Alberto Fernández called on members to uphold the “consensus” principle. Fernández said, “Consensus is the foundational backbone of Mercosur, its DNA, its reason for existence,” adding, “It is a rule. And let us not forget these rules in a global context of great uncertainty.” He declared, “It is with more integration, not less, that [Mercosur] will be in better conditions.”
Brazilian President Jair Bolsonaro, however, replied that the “archaic, defensive” consensus policy was stifling the grouping’s economic potential. Bolsonaro has now taken over from Fernández as the rotating president of the bloc for six months, and has vowed to restore the “original values” of Mercosur.
He added, “We cannot allow Mercosur to continue to be seen as a synonym of inefficiency, of a waste of opportunities and commercial restrictions” and thus called for members to initiate new trade negotiations, conclude currently stalled deals, and reduce tariffs. He then reiterated his stance that the common external tariff must be removed and that member-states must be allowed to enter into agreements with third parties.
Meanwhile, Paraguayan President Mario Abdo Benítez called on the three arguing countries to hold face-to-face meetings to iron out their differences, saying, “Paraguay sees an integrated Mercosur with four members, not a Mercosur of three or two (members). I don't want there to be the perception that there was a setback when this summit is over.”
Likewise, Guillermo Lasso, the President of associate member Ecuador, also urged members to resolve their dispute, saying that integration “continues to be the path and indispensable condition to achieve economic and social recovery.”
On Wednesday, during meeting of the bloc’s foreign ministers, Uruguayan Foreign Minister Francisco Bustillo controversially said that while the country remains a “full member” of Mercosur, it would be moving ahead with bilateral trade negotiations with non-members. In particular, Uruguay seeks to conclude a trade agreement with China.
This official shift in Uruguay’s position was confirmed by Uruguayan President Luis Lacalle Pou on Thursday, when he said, “The world is not going to wait for us. Thus, calmly we want to tell you that Uruguay is heading that way, and hopefully, we can do it jointly.” He noted, however, that his “ultimate objective is belonging to the bloc” and that Uruguay does not to seek to “infringe [on]” the consensus rule.
In March, during a leaders’ summit, Lacalle Pou said Mercosur should not be a “burden”, saying his government is “not willing to make it a corset.” In response, Argentine President Fernández retorted by inviting Uruguay to leave the bloc, saying, “If we are a burden, let them take another ship, but we are nobody’s burden.”
Following their spat, Argentine Foreign Ministry Cabinet Chief Guillermo Chaves said, “If each country is allowed to negotiate individually, Mercosur loses its reason for being.”
During the same meeting, Brazilian President Bolsonaro called for the reduction of the common external tariff. However, Fernández responded that Argentina does not support the reduction of the common external tariff, saying that it was necessary to “preserve a balance between agricultural and industrial sectors, with social justice, in a context of absolute global uncertainty.”
Following these disputes, Argentina appeared to have somewhat relented in its position. In April, Uruguayan newspaper El Observador reported that Buenos Aires had agreed to reduce tariffs and even remove them on 1,900 items that have been identified as having no impact on domestic industries.
The latest meeting, however, illustrates that these concessions have done little to address the concerns of Uruguay and Brazil. It is for this reason that Mercosur has been labelled by several trade experts as “one of the least effective entities in the world, both in terms of trade between its members and with external partners”.
Considering that the countries collectively boast a population of roughly 300 million and control an area of around 15 million square kilometres, it is widely thought that Mercosur has not effectively leveraged its potential.
Brazil and Uruguay Once Again Spar With Argentina at Mercosur Heads of State Summit
Prior to the summit, Uruguay controversially announced that it would be moving ahead with bilateral trade agreements with third parties, drawing concern about regional unity.
July 10, 2021
IMAGE SOURCE: PABLO PORCIÚNCULA / AFP VIA GETTY IMAGESUruguayan President Luis Lacalle Pou