Monday, May 01, 2006

Uruguay and Mercosur

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Mercosur logo
While in Washington DC, President Vazquez declared to a Uruguayan news reporter that Uruguay will change its member status in MERCOSUR, going from full member to just associate member like are today Bolivia, Colombia, Ecuador and Peru.
In case you wonder what’s this MERCOSUR thing, to put it in one sentence is the South America’s European Union wannabe. In theory it’s an integration of South American countries initiative very much like it is the EU, at many levels, not only economical ones. In practice it’s just sad, seems to me like a means to Brazilian’s and Argentinean’s ends.

Ok, now you may wonder why? Why Uruguay wants to get out of this apparently noble thing? The answer is because as it is today it’s a joke, the existent asymmetries in the participating countries are just to damn big, and it seems we are just not mature (or wealthy) enough to act based on long term outcome.

For example, Brazil does whatever the blazes it wants. They are ok with the free trade of goods legislation of Mercosur when it’s about their goods entering other countries, but it’s not unusual for Uruguayan trucks loaded with rice to be blockaded when trying to enter Brazil by Brazilian farmers while Brazilian government sits still, or even worse applies taxes to imported good from other countries of Mercosur.

Another example, the Gualeguaychu’s bridge between Uruguay and Argentina has been blockaded for months by Argentinean demonstrators, while at the same time the Mercosur legislation is supposed to guarantee the free circulation of goods, and persons between member countries. In this light the blockade to Uruguay-Argentina’s bridge it’s just unconstitutional. What did Argentina’s government do about it?

Uruguay and Argentina are probably going through their worst diplomatic conflict since the creation of both countries. Uruguay has called for “the council of Mercosur” in order to find a solution, trying to activate mechanisms defined in Mercosur for this sort of situation. Argentina just did not answer the request.

Participating in Mercosur for Uruguay represents not being able to establish free trade treaties with other nations, like the United States or China. As the president put it Mercosur for Uruguay “is more of a problem than a solution”.


gabouy said...

Yeah it's true, Argentina is suing Uruguay in Den Haag, I hope the whole issue settles there.

On the other hand I can´t help feeling the attitude adopted by (some) argentinians as hypocritical, since they have more than ten paper mills of their own, and similiar complains made to them by paraguay and they do nothing about those. I feel ecology begins at home.

Regarding south american integration I couldn't agree more.

Anonymous said...


Ive been trolling your site for a while now. Im in charge of researching a new location for our factory and Uruguay (along with chile) are the only 2 left.

Anyway regarding the Mecosur thing. As far as our FDI is considered the sooner Uruguay leaves it the better it w ould be for us. As Uruguay will enter a FTA with America soon after, that way along with our main line of products we can then look for work in the US.

Now on the the other hand Chile already has one of these which makes it a bit more attractive.

I could ramble on for ages about this but yeah, we like Uruguay but with Argentina acting like a spoiled child and Bolivia making alot of its neighbours uneasy, We are concerned that uruguay is a little to small to bear much bad weather.

Anonymous said...

I just found your blog and I love it.(I'm goin to bookmark it).
Are you an American living in Uruguay ?!
I'm italian-uruguayan, living in Venice ,at the moment.

Anonymous said...

Hola Gabo,

I stumbled across your site today in researching possible trade connections between South Africa, Argentina and Uruguay. I really think you've done a fantastic job.

I work closely with the Ambassador, Mr. Guillermo Pomi and I have been to Uruguay a few times before and if all goes to plan, I will hopefully be coming to live in either Buenos Aires or Montevideo, depending on work.

I was wondering; last night I had dinner in Johannesburg with Leonardo Nicolidies (SP?), the Minister in the Senate for Arts & Culture. Last week in Kenya he contracted dysentary and was extremely sick (not a great country to get sick in). We are discussing work that I do and possibly looking to find some sort of exchange channel.

Sadly my Spanish is rubbish at the moment; I am having lessons but I couldn't communicate very well. I wanted to ask about the youth and whether issues like HIV / Aids are well communicated, especially in lower income areas. I would also like to find out about unemployment.

Once again, your site is highly informative.

Hasta Luego,

Simon Reader
South Africa

gabouy said...

Hey Simon,

The unmployemnt rate in Uruguay is around 12.4 right now, it's quite bad, though it's been worse.

Regarding HIV, the total number of affected people was 8154 persons until 2004, out of 3.241.003 (around 0.25%). These data was taken from the national institute of statistics.

In my opinion the level of HIV awareness is not bad, could always be better. I know preservatives are given for free in public hospitals, and sexual education is contemplated in school plans.

Anonymous said...


Just a quick question, i mentioned before my company is looking to move from where we are now (Malaysia) With the unemplyment you have is it due solely to lack of jobs or is it people being picky with work? the type of emplyment we have is typical foundry type stuff.

We have a man going over there in the next coulpe of weeks, you do any translation services ;)

gabouy said...


In the nineties uruguayan industry got crushed by liberal economic politics and the mercosur opening of frontiers. Little or no industry means a hard time finding a job for those without proper education and skills, which are the poorer ones.
Some say that begging on the traffic lights leaves an income of around 100-150 dollars a month, which is about the same or little less than what a lot of no education required jobs tend to provide.
Government is now providing around 100 dollars to very low income families, for nothing.

As long as the equation of what's offered for no skilled population does'nt beat by far the doingnothing income, the unemployment rate won't go anywhere.

I don't think unemployment rate is due to pickiness.

And, no, i don't do translation services ;)

Anonymous said...

Yeah, sounds a bit like where im from, Australia, we would all like to go back there but it's impossible. I think it's a cycle most countries seem to go through. Funny though since as you said industry is the biggest emplyer of people (uneducated & educated) yet we seem to be treated like lepers sometimes.

Regarding the wages, i'm rather surprised actually, we were afraid that if we were offering US$400 per month or so we would struggle to find anyone. Labour is the biggest problem we have now so we're quite sensitive about it.

Regarding the translation, had to ask ;)

Anonymous said...

Thank you Gabo, I have consulted the statistics institute who have given me relevant information. I am going to be visiting Montevideo shortly as part of a fact finding mission.

Muchos Gracias,


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Gosh, there is a great deal of useful information above!

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