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Mercosur: Why Guedes’ unexpected support for Uruguay would have “short legs”

By Francisco Aldaya

The Brazilian Ministry of Economy headed by Paulo Guedes has marked its differences in recent days with the position of the Foreign Ministry of his country, by supporting Uruguay’s initiative to seek trade agreements outside of Mercosur.

However, for the Economist Intelligence Unit political scientist and analyst for Latin America, Nicolás Saldías, the unexpected support of a sector of the Brazilian government for the ambitions of Luis Lacalle Pou could have “short legs”.

In an e-mail sent to Bloomberg News, spokesmen for Brazil’s economic ministry stated that making trade negotiations more flexible, as proposed by Uruguay, in no way compromises the strategic objective of greater economic, social, and cultural integration among the partners of the block.

Uruguay's, Mercosur: Why Guedes’ unexpected support for Uruguay would have “short legs”
The President of Brazil, Jair Bolsonaro, and the Minister of Economy, Paulo Guedes (Photo internet reproduction)

The Ministry led by Guedes also expressed that it understands that Uruguay’s search for greater dynamism is the result of a reality that is imposed on Mercosur, since the bloc’s low dynamism in the last 30 years has not served its main purpose: to transform Mercosur into an international integration platform for its partners.

The spokespersons also clarify that the Ministry was not consulted for the letter issued by Argentina, Brazil and Paraguay condemning Uruguay’s position, but that the Brazilian Ministry of Foreign Relations participated in it.

“Mercosur has served as a great market reserve, with a significant loss of competitiveness for its partners,” they stated.

WHY WOULD GUEDES’ SUPPORT HAVE SHORT LEGS?

For Saldías, from the Economist Intelligence Unit, “the comments by the Brazilian Ministry of Economy reflect the position of the government of Jair Bolsonaro and his pro-market minister, Paulo Guedes.”

“Guedes supported the Lacalle government in its attempt to give Mercosur more flexibility and helped mitigate the pressures from Itamaraty in recent years,” the analyst said, adding: “These comments that endorse the Uruguayan government’s political position are not to move the card to Uruguay, because they are totally opposed to Itamaraty’s position, which is going to have much more weight in Lula da Silva’s government.

And the Uruguayan political scientist concluded: “In addition, the market expects that the next Brazilian economy minister will be a politician, like Fernando Haddad, who will surely have a more statist and pro-integration view of the current minister.”

WHAT IS HAPPENING WITH URUGUAY AND MERCOSUR?

Uruguay’s pursuit of trade agreements outside the confines of Mercosur is driving tensions in the South American bloc to levels rarely seen.

Last week, the Government of Luis Lacalle Pou formally requested the incorporation of Uruguay to the Comprehensive and Progressive Trans-Pacific Partnership Agreement (currently signed by Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, Japan, New Zealand, Peru, Singapore and Vietnam).

In addition, the Uruguayan authorities continue to aim for a Free Trade Agreement (FTA) with China, in an initiative similar to the one carried out by Peru with that Asian country in 2009.

These initiatives earned Uruguayan Foreign Minister Francisco Bustillo this Monday the fury of his Argentine counterpart, Santiago Cafiero, within the framework of the Mercosur summit, which takes place between December 5 and 6 in Montevideo, and where Alberto Fernández will assume for Argentina the pro-tempore presidency of the bloc.

“It is contrary to the rules of Mercosur, it violates the consensus rule, the basis of Mercosur. The unilateral nature of certain decisions worries us,” said Cafiero.

Bustillo, on his side, insisted on the stagnation and rigidity of the bloc to justify Uruguay’s decision to open up. “We have already had a critical vision: Mercosur had to live up to its times and challenges, and not one that languishes in Byzantine discussions. We continue to notice the same shortcomings,” he considered.

With information from Bloomberg Línea

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