President Alberto Fernández will take office next Tuesday the pro-tempore presidency of Mercosur with the challenge of reinvigorating the development of internal supply chainswhile within the regional block it is expected the assumption of Luis Inácio Lula da Silva, a fact that will change the balances and the view regarding trade with other national or multinational actors.
The Argentine president will arrive in the Uruguayan capital on Tuesday to claim that Mercosur is not a minor sphere for Argentina, but rather its main instrument for international economic insertion and constitutes a true State policy.
The Montevideo summitwhich will begin on Monday with the meeting of foreign ministersis, in fact, the last of the era of the far-right Jair Bolsonaro -who probably will not attend the meeting- and the prelude to a new Mercosur: that of a Brazil that will accompany the internal relaunch of the block that Argentina wants and that, in the same line that Casa Rosada proposes, will seek “smart” business relationships with third parties.
summit of @mercosur
Preparations are advancing and the room where the Presidents will take their family photo is ready ?? pic.twitter.com/NgzzorDv1F— MERCOSUR (@mercosur) December 3, 2022
Uruguay and an alliance outside the bloc
In this context, the government Uruguayan announced this week its intention to join the Trans-Pacific Agreement (which include countries such as Peru, New Zealand and Australia); a gesture that earned a formal complaint from his three business partners, Argentina, Brazil and Paraguay, who described it as “one-sided” and contradictory with the statutes that govern relations within the regional bloc.
It is not the first time that Montevideo has carried out this type of movement: in 2021, during a virtual summit due to the coronavirus pandemic, the president Luis Lacalle Pou accused Mercosur of being a “drag” for the interests of his country; while days before the last meeting held in Asunción he confirmed his interest in signing a Free Trade Agreement (FTA) with China.
“Beyond the fact that it goes against the founding treaty, there is a kind of modus operandi. The Uruguayan Foreign Ministry makes these announcements that make a lot of noise, but then days, months go by and they do not present anything else. Perhaps, deep down, everything is a position of Lacalle Pou before the Uruguayan public opinion,” a source specialized in Mercosur explained to Télam.
Joint note from the National Coordinators of Argentina, Brazil and Paraguay ?????? before the Mercosur Common Market Group. pic.twitter.com/JkibS0G1yr
– Argentine Foreign Ministry ?? (@CancilleriaARG) November 30, 2022
Revitalize Mercosur
About, Lula’s arrival at the Planalto Palace will come to revitalize a space that Bolsonaro had underestimated and give it a new imprint, in which They can expect negotiations with countries like China, but always within Mercosur and outside the figure of the FTA.
“The key is to achieve the opening of relevant markets without assuming obligations that are impossible to fulfill, through a integrated business vision and a coordination capacity to attend to each of our national interests”, commented sources close to the San Martín Palace.
In the same sense, the Argentine ambassador in Brazil, Daniel Scioli, expressed his opinion that Argentina “does not close to any agreement” but clarifies that any progress has to be made “from the block” so that “the productive sectors of the partner countries are not in decline”.
Nevertheless, in a block in which any decision must be made by consensus, trade, on any scale, could face additional and unexpected obstacles.
For example, to the Uruguayan threat of a unilateral FTA with China, and while Brazil and Argentina imagine a “smart” agreement with Beijing, reluctance could come from Asunción del Paraguay, which maintains diplomatic relations with Taiwan and, therefore, it does not have a dialogue with the Asian giant.
Balance 2021 of Mercosur
Meanwhile, at the Montevideo summit it will be underlined that the block trade with the rThis of the world reached a record level of 598,000 million dollars during the year 2021.
In the case of extra zone importsthese reached the highest level of the last seven years, registering aIncrease of 39% year-on-year and exceeding 2019 levels by 18%.
The balance of the trade balance of Mercosur it was surplus of USD 79,000 million, reaching the highest value since the constitution of the block.
The block’s commercial exchange with the rest of the world reached a record level of 598,000 million dollars.
Intra Mercosur trade in 2021 was 41,000 million dollars, evidencing a 42% increase in relation to the year 2020 and 24% compared to 2019.
This is the highest value since 2014 and is mainly explained by the iexchange of high value-added goods.
