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South America has always been considered its "backyard" by the United States, and it is closely monitored by the United States in various fields to try to contain China's expansion of influence. This is just wishful thinking on the part of the United States, South American countries do not see it this way, and Uruguay recently offered to sign a free trade agreement with China, and it seems very urgent.
Uruguay is so eager to seek a free trade agreement with China for several reasons.
First of all, the world is currently in the era of the epidemic, and the continuous emergence of new coronavirus variants makes the end of the epidemic uncertain. This means that the impact of the pandemic on the global economy will persist, so Uruguay needs to prepare in order to maintain economic stability in this turbulent time. Obviously, to seize the world's largest emerging market, that is, the Chinese market, signing a free trade agreement is crucial.
Second, Uruguay has actually benefited a lot from trade with China, so to speak, "making a lot of money". China has been Uruguay's largest buyer of beef, soy and fibre since 2013, according to the data. In 2020, Uruguay's total foreign exports were about US$8.1 billion, of which exports to China accounted for 27%, reaching US$21.5 billion, making Uruguay the "largest export market". From January to August this year alone, Uruguay's exports to China increased by 63% to $156.8 billion. Clearly, Uruguay has made good profits in its trade with China.
Finally, Uruguay hopes to open the door for China to enter the Mercosur by signing a free trade agreement with China. This "Mercosur" is actually a regional economic organization of four countries, Brazil, Argentina, Uruguay and Paraguay, with a population of 2.2 billion, an annual output value of $1 trillion and a trade volume of $200 billion. Obviously, Uruguay is worried that China will not easily agree to sign a free trade agreement with it, so it is willing to "open up markets" for China.
However, observations indicate that Uruguay, while eager to reach an agreement, has some agreements with the other three countries in South America that cannot sign separate trade agreements, which could become an insurmountable obstacle to the China-Ukraine FTA.
This is a race to sign as soon as possible, because once countries recognize this, the queue for an FTA with China will increase, and Uruguay could lose its competitive edge.
However, under Mercosur, contracting parties are not allowed to enter into trade agreements with other countries without the consent of other member States. But Uruguay said that despite its loyalty to the economic organization, it decided to pursue its own interests, even if other members were dissatisfied, they considered it to be a minor grievance.
It is clear that Uruguay is willing to give up the $200 billion Mercosur (Mercosur" in order to sign a free trade agreement with China, and is even willing to pave the way for China to promote trade between the two countries. Although China has not yet clearly responded to Uruguay's warm invitation, it should be pointed out that there is not much obstacle for Chinese goods to enter the South American market, and South American countries, including Uruguay and Peru, are also actively strengthening trade ties with China, and Uruguay may need more leverage to persuade China. This helps Chinese goods to better access the South American market.
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