At the annual meeting of the inter-American development bank (IDB), Uruguayan president José Mujica criticised Mercosur, pointing to the contradictions and trade disputes within the regional bloc.
Mujica stated that the economic bloc is “stagnant” and characterised by a “lack of institutional guarantees.”
However, the Uruguayan leader also emphasised the strategic importance of Mercosur for the growth of local industries and in the strengthening of domestic markets.
“We have a Mercosur riddled by contradictions, which is not respected, and that comes under criticism every day, but woe to us if it did not exist.”
“Mercosur’s defects are our faults and we will fight to the death, without comprising or losing it.”
IDB officials stressed the importance of widening regional integration as a mechanism to counter the international economic crisis.
“If we cannot negotiate with dollars, we will barter, and if we have to make monthly payments, we will have to tell our industries, this is the parameter that you have to work with,” Mejica continued.
Trade tensions within the regional bloc go beyond the international crisis. Imbalances within Mercosur have been present since its conception.
Control measures on imports from Brazil and Argentina, in particular, has been a constant concern for the Uruguayan leader.
“Mercosur serves us as a political platform, but not as a trading bloc.” says economic researcher, Nicolás Albertoni Gómez. “This is an open secret since every government knows that it doesn’t work. We have to consider flexible commerce for the smaller economies.”
María Dolores Benavente, president of the Uruguayan National Academy of Economy, agrees with Albertoni that “the only solution for Uruguay is free trade.”
Under Mercosur, any trade agreement with third parties must be ratified first by other bloc members. In previous cases, Argentina and Brazil have both systematically opposed such initiatives.
At present, Uruguay suffers from a large inflow of capital which reduces the competitiveness of its exports and exposes the country to cheap imports.
Mujica will travel to Brazil on Thursday to discuss the possibility of trade expansion with Brazilian president Dilma Rousseff.
“We don’t need to leave Mercosur,” stated Senator Sergio Abreu, “but Brazil must understand that Argentina is locking us out and we need new markets.”