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situation report

Aug 11, 2016 | 14:32 GMT

2 mins read

Uruguay: Montevideo Considering Joining Pacific Alliance Trade Bloc

Uruguayan Foreign Minister Rodolfo Nin Novoa confirmed Aug. 10 that Uruguay is reassessing its trade in several ways. First, it will sign a free trade agreement with Chile in October. Second, it was invited by Peru and Colombia to join the Pacific Alliance. And third, it will update its trade agreement with Mexico. Perhaps the most notable of these changes is that Uruguay is considering joining Peru, Colombia, Chile, Costa Rica and Mexico as a member of the Pacific Alliance, a bloc that until recently was only minimally important next to the much more prominent Mercosur.

Uruguay is not the only South American country eyeing the bloc. Last June, Argentine President Mauricio Macri attended the Pacific Alliance summit, and Argentina was accepted as an observer of the bloc. As a full member of Mercosur, Argentina is constrained in its ability to join the Pacific Alliance, but it has defended free trade between both blocs. Brazil, a member of Mercosur, has also reached trade deals with Pacific Alliance members Colombia and Peru to reduce import tariffs on auto trade. It has also proposed reducing to zero the import tariffs between Mercosur and Peru, Colombia and Chile by 2019.

Up to this point, the Pacific Alliance and Mercosur have been differentiated by their geographic, political and economic goals. The Pacific Alliance began by grouping four of Latin America's most trade- and business-friendly countries — Chile, Peru, Colombia and Mexico — while Mercosur grouped together more protectionist states. As the left loses ground, however, in places like Argentina and Brazil, the prospect of uniting the two blocs has become more likely.

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