MERCOSUR weakened: Uruguay begins FTA negotiations with China; China invites Argentina to join BRICS

RIO DE JANEIRO, BRAZIL – On Tuesday evening, September 7, Uruguay’s president Luis Lacalle Pou announced in a press conference that Montevideo had received “a formal letter from the Chinese government agreeing to move forward with an FTA.”

He also announced that “feasibility studies will begin shortly” to proceed towards signing the agreement within a period of no less than a year.

On Wednesday, upon leaving the economic cabinet meeting, Argentina’s Minister of Productive Development Matías Kulfas told journalists at the Casa Rosada that the negotiation is perceived as an institutional rupture.

“Uruguay is sovereign, and it can reach a bilateral agreement with China outside MERCOSUR, or it can remain within the bloc. The regulations are very clear: agreements are reached as a bloc, not bilaterally,” the Minister stated.

From Argentina’s perspective, an FTA with China would threaten its local industry and would imply the virtual collapse of tariffs that currently prevent the entry of goods from China. Such a “rupture” could easily lead to a flow of triangulated goods from Uruguay to Argentina, thus corrupting the current trade scheme.

BUENOS AIRES STRIKES BACK

However, only a few hours after the announcement, Buenos Aires counter-attacked, capitalizing on another announcement by Beijing, after the Chinese government invited Argentina to consider joining the BRICS group of countries made up of Brazil, Russia, India, China and South Africa.

In this context, Argentina’s ambassador to China Sabino Vaca Narvaja was invited to a meeting of BRICS representatives in the city of Xiamen, where the possibility of Alberto Fernández’s government taking diplomatic steps to become a full member of this group of countries was analyzed.

The BRICS represent approximately 42% of the world’s population, 23% of global GDP, 30% of the planet’s territory and 18% of total international trade.

The Casa Rosada confirmed that President Fernández has decided to advance in negotiations with China and the other BRICS countries to become a member of the bloc.