Uruguay One Step Away from Joining Trans-Pacific Partnership
EspañolUruguay will soon join the Trans-Pacific Partnership (TPP), one of the most important free-trade alliances on the planet. According to a report by Uruguayan news outlet El Observador, the South American nation will become the latest TPP member state in 2015.
While the final decision will be in the hands of the next Uruguayan president, the major candidates in October’s election have offered their tacit support for Uruguay’s membership in trade blocs outside Mercosur — the South American trade alliance that includes Brazil, Argentina, Uruguay, Paraguay, and Venezuela.
The TPP, originally formed in 2006 between Chile, Brunei, New Zealand, and Singapore, is designed to reduce tariff and non-tariff trade barriers between member states. According to data obtained by the Economic Analysis Unit at El Observador, trade activity from TPP members comprised 8.1 percent of global GDP in 2013.
Currently, the United States, Vietnam, Australia, Peru, and Malaysia are negotiating their membership into the TPP, while Mexico, Canada, and Japan are still considering joining the multinational economic partnership.
In a recent interview, Uruguay’s current president, José Mujica, expressed his optimism regarding the prospect of membership, while acknowledging the peril involved: “It is possible that some see the TPP as a political tool of the United States, but if we don’t join, it will be an even more powerful tool. We need to be a part of it so it will be our tool,” said the president.
“You can lose a fight because you win on the battlefield, but you can also lose because you are not on the battlefield. Where integration is being discussed, we must put up a fight.”
Mujica also said that Uruguay is in need of “a smart policy to help develop complementary trade,” and that if the country were to close itself off now, it would become difficult to reintegrate later.
According to El Observador, the proposal for Uruguay’s membership came from either Chile or Peru, not the United States.
— Infobae América (@InfobaeAmerica) September 12, 2014
“Without a doubt, Chile will facilitate [Uruguay’s] membership,” said Michelle Bachelet, who on Friday made her first visit to Uruguay since being reelected president of Chile in March.
Chilean ambassador to Uruguay, Eduardo Contreras Mella, told El Observador that “Chile will view [Uruguays’s] incorporation very favorably and sympathetically … Chile’s spirit in relation to the new blocs is to act to include Latin-American countries.”
Presidential Candidates Speak Out
When asked Friday how they would handle the issue if elected, Uruguayan presidential candidates said they would advocate for a more open Mercosur, and would allow membership in trade agreements outside of the alliance, according to Argentinean news outlet Infobae.
“We need to work within Mercosur toward an open regional integration process that allows countries with smaller economies … to openly negotiate with the rest of the world,” said ruling party candidate Tabaré Vázquez, who currently holds 42 percent of the electorate’s support, according to the polling firm Factum.
Lacalle Pou, currently polling at 32 percent, was pleased with the news that Brazilian presidential candidate Marina Silva has also spoken out in favor of relaxing Mercosur rules. “It is good news,” Pou said.
Pedro Bordaberry, currently behind in the polls at 15 percent, said if Mercosur doesn’t change its model, Uruguay should leave. Pablo Mieres of the Independent Party stated he would like to see Uruguay become a full member of the TPP.
Small Economy, Big Opportunity
Maximiliano Sosa Andrés, an Uruguayan economist at the consulting firm Towers Watson, told the PanAm Post that joining the TPP would be an excellent opportunity for the country to enter a market that potentially represents over 30 percent of the global economy: “For a small economy like Uruguay’s, trade liberalization is the only way to guarantee a dynamism of demand that permits the sustained growth that has occurred in recent years, while protecting against the volatility of domestic consumption.”
For a small economy like Uruguay’s, trade liberalization is the only way to guarantee a dynamism of demand that permits sustained growth.
“At a time when Argentina and Brazil — Uruguay’s primary trading partners after China — are imposing trade barriers, an agreement of this magnitude would create new opportunities for the country’s economy, and reduce dependence on Mercosur.”
He warned of the risk of “staying outside,” since alliances of this nature usually result in significant trade gains for member countries, but at the potential cost of those outside the group: “To let this opportunity pass would be a risk for the future development of the country.”