Brazil Seeks to ‘Modernize’ the MERCOSUR Common Market

On Monday, Brazil's Minister of Economy, Paulo Guedes, affirmed that the Common Market of the South (MERCOSUR) will be “modernized”. If Argentina, Uruguay and Paraguay do not agree with this position, they are "free to leave the block", he pointed out. 

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President Jair Bolsonaro seeks to reduce the MERCOSUR external tariff, which is used to tax imports from countries outside the block, by 10 percent. He also promotes the possibility that MERCOSUR countries can directly negotiate bilateral trade agreements with other nations.

While Uruguay and Paraguay defended these proposals, Argentina opposed them head-on. "We have more strength if we negotiate together as a block," Argentine Foreign Affairs Minister Santiago Cafiero said , stressing that the TEC reduction shall not include all goods to protect national industries from excessive imports.

Despite this, Guedes insisted that MERCOSUR countries shall "advance" and assured that Brazil would stand firm in this position as Pro Tempore President of this block.

Since 2000, MERCOSUR Resolution 32 impedes its members from establishing one-basis contracts with third countries. Despite this, Uruguay's President Luis Lacalle began negotiations to achieve a Free Trade Agreement (FTA) with China.

"It is clear that Uruguay is a sovereign country and can make the decision it deems most convenient. However, we must respect the consensus and MERCOSUR rules to resolve our political differences," Argentina's Productive Development Minister Matias Kulfas stressed.

Uruguay does not recognize Resolution 32, arguing that it is not a rule that the legislative powers of each country approved, so it cannot be considered valid.