Frustrated with Brazil, Uruguay and Paraguay Ponder Leaving Mercosur

The months’ long dispute between Argentina and Uruguay over the construction of two pulp mills on the Uruguayan side of a river shared with Argentina has exposed the increasing disappointment of Mercosur junior partners with the overall functioning of the block dominated by Brazil and Argentina.

Argentina’s petition to freeze Uruguay’s major investment in half a century, 1.5 billion US dollars, has livened the Mercosur debate, pros and cons, of a block which is proving to be weakened player in world trade and regionally, particularly for Uruguay and Paraguay.

Uruguay’s frustration is based in the current confrontation with Argentina and the blocking of three bridges which link Argentina with Uruguay and the growing disenchantment with the senior partners’ attitude towards junior members.

This has pushed Uruguay to move closer to the United States, which together with Nafta partners, Canada and Mexico, has become the country’s main trade partner overtaking the old "iron allies" of Argentina and Brazil.

Effectively Brazil’s strong agriculture development has made the country a global power in such items as poultry, beef, pork, plus substituting some of the demand for fruits, vegetables and dairy products which has a direct impact on sales from Uruguay, Paraguay and to a certain extent Argentina.

Furthermore Brazil is rapidly becoming self sufficient in oil production, which will also have an impact in Argentine sales.

Brazil admits that discussions with Argentina have left Uruguay and Paraguay in second place as well as the main purpose of the block: that integration should be the platform for the four countries in the global market.

In Paraguay the president of the Industry Confederation, Eduardo Felippo has described belonging to Mercosur, "as a disgrace" since block membership has meant "no major change" for the country.

"Our main problem and challenge are the pseudo tariff barriers imposed by the "important private lobbies" from Argentina and Brazil which block the access of imported goods to those countries.

Paraguay has also established closer military links with United States which has irked Brazil that considers the region its "backyard".

Uruguay and Paraguay are considering the possibility of following on Chile’s track which is an associate member of Mercosur, which means full participation in political affairs but not in trade issues.

Mercopress – www.mercopress.com

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