Given Brazil's long delay in extending import licenses for Uruguayan dairy produce Uruguay is considering what steps to take. An estimated 10.000 tons have been ready for shipping for over two months but there has been no reply from Brazilian trade officials.
"The licenses that have been liberated so far are minimum and we have 10.000 tons waiting for over 60 days which is in violation of Mercosur and World Trade Organization, WTO, rules," said Uruguayan government reliable sources who anticipated the issue most probably will be on the table next week, when the Mercosur Common Market Council meets in Paraguay, "if there are no advances."
"We expect the Brazilian government reacts to the situation, meantime we will follow the evolution of events," added the sources. Next week is the Mercosur presidential summit in Asunción and a day before there is a more technical event when Foreign Affairs and Finance ministers plus Central bank presidents meet to discuss specific issues.
In spite of the repeated impediments and hurdles to intra Mercosur trade, Uruguay has traditionally avoided extreme measures and favored low profile negotiations.
Meantime the Uruguayan dairy farmers association has been meeting with their Brazilian counterparts to try and work on a solution. With international dairy prices falling Brazilian farmers are demanding a minimum reference price of US 3,500 per ton of powder milk, which means the dairy man, will be paid 35 to 40 US cents per liter of fresh milk.
Brazilian farmers fear imported powder milk at lower prices could threaten their cost structure in a depressed global market for dairy produce.
Uruguayan officials complained that Brazil "is treating us like Argentina, which has imposed restrictions on Brazilian imports and is retaliating. We haven't articulated any kind of restrictions on Brazilian exports."
However Argentina this week agreed to a quota systems regarding dairy produce and was able to liberate 9.000 tons which were also immobilized because of lack of licenses since last May. But Uruguay is contrary to the quota system, "we support free movement of goods and services."