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Last week, Uruguay announced the completion of a feasibility study for a free trade agreement with China, once again stressing that it would firmly reach a free trade agreement with China even if neighboring countries object. This neighbour refers to the other three member States of MERCOSUR, namely, Brazil, Argentina and Paraguay. Mercosur is a regional economic cooperation organization in Latin America consisting of four member States and two associated countries, Chile and Bolivia, which is considered to be the fifth largest economic bloc in the world.
Uruguay and China began a feasibility study of a free trade agreement last September, announcing last week that it had been completed and was about to begin formal negotiations. However, the member States of MERCOSUR objected to Uruguay's decision. Argentine Foreign Minister Cafiero argued that trade negotiations with other countries should be conducted as a bloc, rather than signing trade agreements individually, as separate agreements could distort existing rules and make costs higher. Valdés, chairman of the foreign affairs committee of Argentina's lower house, also expressed opposition, fearing that the Chinese deal would disintegrate Mercosur.
However, Uruguayan Foreign Minister Bustillo firmly supported the signing of a free trade agreement with China, noting that Mercosur is only an imperfect free trade area that needs to be modernized to better access the international market. He stressed that Uruguay's cooperation with China was transparent and that he was willing to engage in a frank dialogue with other Mercosur members. He also stressed that Uruguay had the right to negotiate international trade agreements with third countries, while other countries had no right to interfere.
Unlike Argentina, Brazilian Foreign Minister Carlos França has taken a more conciliatory approach, advocating that each country develop its own strategy according to its own circumstances, while retaining the integration core of Mercosur. Paraguay is the only country in South America that does not have diplomatic relations with Chinese mainland, but has diplomatic relations with Taiwan. However, Raúl Cano, Paraguay's deputy minister of economy and integration, expressed hope that Mercosur will enter into joint negotiations with China.
Uruguayan Foreign Minister Bustillo said that Uruguay's domestic market is limited in size and is in a period of transition and must enter third markets in order to achieve sustainable industrial development. If it was not possible to reach an agreement jointly with MERCOSUR's partners, member States could do so on their own. He also said that if Brazil, Argentina and Paraguay are willing to enter into joint talks, it will be the best option, but if they are not, Uruguay will continue to push forward with a free trade agreement with China.
Mercosur's obstruction of Uruguay's FTA with China does not appear to be motivated by concerns about market rules, but by concerns among neighboring countries that Uruguay and Argentina are too competitive with China and want to constrain member states through Mercosur rules. Uruguay, on the other hand, has shown that it is no longer willing to be subject to Mercosur, and either negotiates with Mercosur with China or concludes a free trade agreement with China on its own, and the outcome can only be seen.
In conclusion, Uruguay's FTA with China has sparked divisions within Mercosur, reflecting the different positions of member states on trade policies. Uruguay wished to expand its markets and achieve sustainable development, while other countries were more concerned with preserving its current trading position. This controversy will continue to affect trade relations within and outside Mercosur and will require close attention. Finally, the formulation of trade policies should seek balanced and win-win solutions according to the interests and conditions of each country, so as to promote regional economic development and cooperation.
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