Uruguay. Strengthening trade ties with China

by Giuseppe De Santis –

In recent days, the president of Uruguay Luis Lacalle Pou traveled to China where he was received by the leader of the Chinese Communist Party Xi Jinping in order to strengthen trade relations between the two countries.
Unlike Brazil and Argentina, Uruguay does not have much weight at a diplomatic level and for this reason the president of the small South American country wants to try to increase exports to China and obtain the same benefits enjoyed by Chile, Costa Rica, Ecuador and Peru, although this is very difficult.
In fact, Uruguay is a member of Mercosur, a trading block which also includes Argentina, Paraguay and Brazil and these three states want to create a free trade area with the European Union instead of with China and for this reason the goods exported from Uruguay to China must pay a commercial tariff.
Not being able to obtain the reduction of trade tariffs, Uruguay has however reached agreements with China to cooperate in various areas such as agriculture, education and technology without counting the agreements regarding customs inspections which will facilitate Uruguayan exports.
It must be said that Uruguay is one of the countries that has a trade surplus with China which in 2022 was equal to 1.5 billion dollars, a value double compared to the 766 million dollars in 2021 and exports are mainly meat which constitutes 67% of goods sold to China.
With this move, Uruguay has also eliminated competition from Paraguay, given that the latter exports the same agricultural products as Uruguay but maintains diplomatic relations with Taiwan and will therefore be further penalized by China, which will give priority to Uruguayan products.