After Brazil’s decision to lower Mercosur tariffs, Uruguay reiterated the “need to modernize and sincere” the bloc

The President of Uruguay, Luis Lacalle Pou (EFE / Raúl Martínez)

Uruguay appealed this Friday to the “need to modernize and sincere” the Southern Common Market (Mercosur) after knowing the decision of Brazil, announced hours before, to lower its import tariff and, therefore, to adopt an alteration that still it is discussed within the block.

The Chancellery and the Ministry of Economy and Finance of Uruguay issued a joint statement, in which they state that “Brazil’s decision is understood in the current framework of MERCOSUR as an imperfect Free Trade Zone.”

“What was communicated by the Government of Brazil reflects the need to modernize and open up MERCOSUR, as a way to achieve a better openness and international insertion,” the letter added.

This Friday, Brazil announced that it will apply a 10% reduction to the tariffs of 87% of the universe of its imports of goods and services.

According to a joint statement from the Ministry of Foreign Affairs and Economy of that country, the reduction will be in force until December 31, 2022 and was decided unilaterally and under the Mercosur regulations that allow “the adoption of measures aimed at protecting the life and health of people ”.

Brazil announced that it will apply a 10% reduction to the tariffs of 87% of the universe of its imports of goods and services (EFE / Kai Försterling)

The reduction of the external tariff of the bloc that Brazil integrates with Argentina, Uruguay and Paraguay has been discussed for months and has already been virtually agreed, although not formalized.

Argentina was the country with the greatest resistance to these cuts, but a month ago it was more open, as part of a visit to Brasilia by its new foreign minister, Santiago Cafiero, who was received by his counterpart Carlos França.

At the end of that meeting, both ministers announced that they had reached an “agreement” for this 10% reduction, which would be consulted with Paraguay and Uruguay, which were already inclined to accept this alteration.

Until then, it was expected that the reduction in tariffs would be announced at the next Mercosur summit, scheduled for December and which will be organized by Brazil, which currently holds the semi-annual presidency of the bloc and has not established a date or place so far. for that presidential appointment.

The maximum tariff on Mercosur imports is currently 35%, but on average 12% is applied and Argentina remained against reviewing it until Cafiero’s visit to Brazil last October.

Until then, the Argentine government advocated more moderate and selective cuts, arguing that this would allow the national production to maintain its competitiveness against imports from other markets.

In the note in which the bilateral decision of the Government of Jair Bolsonaro was announced this Friday, it was specified that Brazil “has worked intensively in the Mercosur field to review” the tariff, which “in more than 25 years has never suffered a comprehensive reform process ”.

Argentina was the country with the greatest resistance to these cuts, but a month ago it was more open, as part of a visit to Brasilia by its new foreign minister, Santiago Cafiero

The statement adds that Brazil “remains fully committed to the ongoing negotiations in Mercosur” and stressed that its decision “follows the parameters already agreed” with the other partners of the bloc.

In recent months, the Brazilian government has promoted a series of measures to contain inflation, which accumulates an increase of 10.25% in 12 months until September, exceeding double digits for the first time in more than five years.

“At a time like the present, when we have strong inflationary pressure in the Brazilian economy, we would like to create a supply shock, facilitating the entry of imports to moderate price readjustments,” said the Minister of Economy before the announcement, the liberal Paulo Guedes, quoted by the newspaper O Globo.

According to O Globo, the measure applies only to Brazil and at the request of Argentina, items considered “sensitive” by that country, such as automobiles, auto parts, dairy products, textiles, peaches and toys, were excluded.

The reduction of the common external tariff on imports from third countries has been, together with the possibility of individually negotiating trade agreements with third countries, one of the thorniest issues for the bloc in recent years.

The flexibilization of the bloc, driven above all by Brazil and Uruguay, in pursuit of greater integration into the global economy, collided with the immobility of Argentina and were the cause of great tensions.

With information from EFE and AFP

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