During the pandemic, the bond between Uruguay and China has deepened with full access to the Sinovac vaccines that arrived to meet Uruguayan health demands. However, what caught the attention of national and regional policy was the announcement by the Uruguayan president that a feasibility study would be initiated to sign an FTA (Free Trade Agreement) between the two countries.
Of course, such a study does not guarantee the opening of negotiations, but it is considered the first step towards an FTA. Uruguay’s decision and China’s move is yet another sign of a growing relationship that generates huge expectations among national actors.
This is the last step after the consolidation of the relationship between Uruguay and China with the signing of the Strategic Association declaration during the visit of President Tabaré Vázquez to China in 2016.
On that trip, the possibility of moving forward with the signing of a bilateral FTA was launched for the first time, which the former Uruguayan president said would happen in 2018.
In the end, the agreement was not reached, mainly due to the lack of leadership in domestic politics, in which some national actors blocked the possibility of advancing in the negotiations.
Opposition from Mercosur partners
Uruguay’s ambitions, however, face another major challenge and have so far generated controversy in the region due to the different points of view of Mercosur members.
Uruguay argues that it can move forward with the signing of bilateral agreements as it understands that Decision 32/00 of the Common Market Council is not in force. But this position is not shared by Argentina, which puts the Treaty of Asunción in the first place, a vision shared, with less emphasis, by Paraguay.
In the case of Brazil, it should be remembered that, in parallel with the flexibilization proposal led by Uruguay, its interest was fundamentally centered on reducing the common external tariff of the integration scheme.
Brazil, especially with the support of the Minister of Economy Guedes and President Bolsonaro, accompanied Uruguay in its proposal and has never taken a firm position against an agreement between Uruguay and China, although it does not expressly support it either.
However, with the change of chancellor, Itamaraty returned to play a more preponderant role, which resulted in less clear signals from Mercosur’s main partner.
In this framework, assuming a change of context, especially in Brazil due to the electoral scenario, the Uruguayan representatives should return to the negotiations, seeking, for example, the regionalization of the bloc’s relations with China, which could be articulated by launching a Mercosur-China dialogue. next semester, when Uruguay will be in charge of the Mercosur presidency.
This signal would be of central importance for China to decide to go ahead with bilateral negotiations. Uruguay’s decision is legitimate considering that all parties are advancing in decisions that go against the Treaty of Asunción, an action that has taken place regularly from 1999 onwards.
On the other hand, while Uruguay established diplomatic relations with China in 1988, a few years after Argentina and Brazil, Paraguay is one of 14 states in the world that still maintain diplomatic relations with Taiwan. This is yet another obstacle to Mercosur’s normal relations with the Asian power.
But if Uruguay wants to move in this direction, in addition to dealing with its neighbors, it must accelerate the negotiation of other agreements proposed by China in areas such as the digital and green economy, investment and cooperation within the scope of the Belt and Road.
These would be important signals for China, as they accompany the strategy of achieving an Integral Strategic Association, in which the signing of the FTA is a very important element, but not the only one.
The TLC-Uruguay path
Since 1988, Uruguay’s relationship with China has deepened, not only in terms of exponential growth in trade in goods, making China for a long time Uruguay’s main trading partner, but also in terms of cooperation and political exchanges. Investments, however, increased, but at a slower pace compared to other South American countries.
Since the beginning of the 21st century, China has taken significant steps towards becoming a global player, joining the WTO in 2001, which in a few years catapulted it as the world’s leading exporter, surpassing Germany.
China also began to gain ground in post-war international organizations, a strategy complemented by the implementation of new institutions and strategic projects.
In 2001 the Shanghai Cooperation Organization was created, in 2013 China launched the Belt and Road megaproject, in 2014 it led the launch of the New BRICS Development Bank, in 2016 it did the same with the Asian Infrastructure Investment Bank and in 2020 it managed to sign the RCEP, the trade agreement with the greatest economic and commercial impact at a global level.
For China, the signing of a trade agreement is one more link in a much broader chain of agreements and signals that result in an increased level of importance that the Chinese Communist Party attaches to certain countries. Therefore, in order to arrive at an Integral Strategic Association, a series of long-term actions must be carried out, especially in the case of small economies.
In this sense, Uruguay signed a relevant number of cooperation agreements in different areas, but also joined the Belt and Road Initiative, the New Development Bank and the Asian Infrastructure Investment Bank, which are clear signs of the relevance given to its main commercial partner.
Of course, Uruguay’s bet is very ambitious, but it is still possible if the current strategy is partially adjusted. Uruguay’s path towards a Free Trade Agreement with China has already begun and there should be no turning point.
