Uruguay-U.S. Free Trade Agreement Eminent?

April 21, 2006

While visiting Argentina in January of this year, U.S. Sen. Melquiades "Mel" Martinez, R-Fla., during an Argentine radio interview, said a free trade agreement between the U.S. and Uruguay "is a done deal".  However, on March 13th, the MercoPress reported that Uruguay's Foreign Affairs Minister, Reingaldo Gargano, during a visit with his Brazilian counterpart, totally disregarded the possibility of a free trade agreement with the United States which could endanger MERCOSUR.  MERCOSUR or "common market of the southern cone" is a regional common market treaty between the Argentine Republic, the Federal Republic of Brazil, the Republic of Paraguay, and the Eastern Republic of Uruguay.  Needless to say, one is receiving mixed signals about the signing of the Uruguay - U.S. Free Trade Agreement. 

The following excerpt from a recent, insightful article by Martin Porcel, Director of the Ohio Department of Development - Argentina and Uruguay Trade Office, titled "The Highway Approach in South American Politics.  Will Uruguay sign a free trade agreement with the US?" sheds light on how politicians in the region are dealing with the issue:

 "On a highway, motorists pass slower cars using the left lane, but once they have passed the other car, they move back to the right lane.  Politicians in South America do the same: they advance on the left and govern on the right!

If not, how can we explain the conduct of the most prominent political personalities in South America?  The ultra leftist President of Venezuela, Hugo Chavez, verbally attacks the US every time he has an opportunity while keeping the US as his biggest source of oil.  In Brazil, President Lula came into power with the support of the "without land movement" and a coalition of left parties, but just a few days ago paid in full the national debt that Brazil had with the International Monetary Fund (IMF). The same happened in Argentina, where President Kirchner, gained popularity with an anti-IMF speech and, in a move without precedent, paid in full and in advance the entire debt with the Washington  based organization.
In Uruguay, Socialist President Vazquez will have to make a hard decision: remain in MERCOSUR, or sign a free trade agreement with their largest export partner, the US.  If the incentive is a commercial one, the reason is very simple; but in political terms, it might be hard to justify signing an agreement with "The Imperialists".

Also signing a free trade agreement with the US means trouble with the MERCOSUR partners, since their agreement is to negotiate as a block and not independently."

The U.S.-Uruguay Joint Commission on Trade and Investment met for the fifth time from April 3-4 in Washington.  After the meeting, President Bush urged the United States Senate to pass the U.S. - Uruguay Bilateral Investment Treaty, which was signed November 4, 2005.  According to President Bush, the bi-lateral investment treaty's aim is the creation of more favorable investment conditions for U.S. investments in Uruguay.  Unfortunately, President Bush did not elaborate on the Uruguay - U.S. Free Trade Agreement; as a result, one will have to see how things develop once the United States Senate has passed the Bilateral Investment Treaty.

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