The presidents of the member countries of Mercosur will participate this Thursday in Asunción in a summit marred by absences and marked by political tension. Uruguay’s decision to move forward with a trade agreement with China without the consent of the rest of the partners -Argentina, Brazil and Paraguay- has squandered an agenda that, in principle, was focused on the economic consequences of the war in Ukraine, especially inflation. The differences between presidents even prevented the Ukrainian Volodimir Zelenski from intervening by videoconference, as he himself had requested. “There was no consensus. The Ukrainian ambassador to Argentina concurrent in Paraguay was informed. The foreign minister himself made the communication,” said Raúl Cano, deputy foreign minister of Paraguay, the host country.
Zelenski communicated last week with his Paraguayan counterpart, Mario Abdo Benítez, in his capacity as president pro tempore of the regional bloc, to request a space for virtual participation within the summit. Any decision within Mercosur is made by consensus, that is, the refusal of one of the partners is enough for a motion to fail. This has been the case, as explained by Vice Foreign Minister Cano, who excused himself from giving the name of the country that rejected the presence of the Ukrainian president. “Who is in favor and who is against, I don’t know which State did not agree. Nor can we disclose the State that did not give its consent,” said Canp.
Where there was agreement was on an issue that has been in political discussions for years: the lowering of the Common External Tariff (AEC) paid by partners for extra-zone products. At the meeting of the Council of the Common Market, held this Wednesday at the Conmebol headquarters in Luque, on the outskirts of Asunción, it was defined that products with a tariff of 2% go to 0%, and those with one of between 4 and 14% reduce it by 10%. As an example, Vice Minister Cano explained that a position with a rate of 4% will pay 3.6%.
The reduction was an old demand from Brazil, which already in 2019 had proposed lowering the AEC by 50%. It collided with the intransigence of Argentina, which argues that such an opening threatens the development of its local industry. But in October of last year, Buenos Aires finally relented and accepted a 10% reduction. Now it has accepted another 10%, in line with the wishes of the rest of the partners, who demand more flexibility and greater commercial openness.
A date with absences
This Thursday’s appointment will be the bloc’s first face-to-face event after the pandemic. It was expected as a great event, but the internal tensions cloud the expectations of great announcements. Not even the confirmation of a trade agreement with Singapore or the lowering of the CET will attract attention. The Brazilian Jair Bolsonaro has already announced that he will not travel to Asunción as a repudiation of Uruguay. But he will not be the only one missing from the family photo. Attentive to the internal tensions, the Chilean Gabriel Boric and the Bolivian Luis Arce suspended their participation, to which they were entitled as presidents of the bloc’s associated countries. Instead, they will be the Argentine Alberto Fernández and the Uruguayan Luis Lacalle Pou, promoter of the discord.
On Wednesday of last week, Lacalle Pou announced at a press conference in Montevideo that his country had concluded “the work with China.” “We reached a beneficial agreement for the countries and the negotiation of the Free Trade Agreement will begin. We do not want to advance alone, but Uruguay was not willing to stand still. It will surely be the subject of conversations at the next summit”, he anticipated.
According to the reading of Argentina, Brazil and Paraguay, the measure announced by Uruguay violates one of the principles signed in the founding treaty of Mercosur, which prevents any of the member countries from negotiating extra-zone free trade agreements without the endorsement of the rest. Uruguay disagrees with that reading, as it had already stated at the presidents’ summit in March 2021, when the Argentine Fernández recommended Uruguay “leave the ship” if it considered the bloc “a drag” on its economic development. The blood did not then reach the river, but Montevideo continued its negotiations with Peking.
The Brazilian Bolsonaro, who defends maintaining the clause that prevents bilaterality, responded to Uruguay with his absence. “I said I’m not going. In politics you can go back on some things, but my decision so far is not to go to Mercosur, despite Marito’s call [Abdo Benítez]”, explained Bolsonaro in an interview to the CNN last Thursday. The Foreign Minister of Paraguay, Federico González, confirmed this Wednesday the absence of the Brazilian, but he lowered his tone. “Always in every summit event, or international meeting, there is the feasibility of the non-attendance of one or more than one,” he said, “and the position of Brazil, which is similar to that of Paraguay, is that we always have to negotiate as a block the four ”.
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