Link to article: https://www.reuters.com/world/americas/uruguay-advances-free-trade-talks-with-china-aims-be-mercosur-gateway-2021-09-08/
The government of Uruguay is commencing trade talks with China. Uruguay hopes that the formation of a trade agreement with China will push them to trade with South American trade organization Mercosur, of which Uruguay is a part. Uruguayan president Luis Lacalle Pou announced that China officially requested to move forward with trade talks. In July, the President of Uruguay announced that Uruguay would negotiate the terms of the trade agreement without the input of the rest of Mercosur, angering other members of Mercosur such as Argentina, Brazil, and Paraguay. Argentinian Minister of Productive Development Matias Kulfas stated the regulations of Mercosur are clear, and Uruguay must coordinate the trade deal with other members of the trade organization. China currently purchases approximately 30% of Uruguay’s exports, including 56% of Uruguay’s exports on meat, which is the focus of Uruguay’s exports.
The situation evolving in South America reflects the enormous power that China wields. China is single-handedly able to create turmoil in a trade organization consisting of multiple countries. It seems evident that China is attempting to increase its trading capacities with South American countries. China has already made trade agreements with Chile and Peru, and evidently wants to expand its relationship with Uruguay, and it’s likely many other South American countries will follow. Additionally, it is likely that China has something to do with Uruguay refusing to cooperate with Mercosur in the trade deal negotiations. China would benefit more from working solely with the members of Mercosur individually than by working with the organization as a whole; China will be able to negotiate rates and policies with Uruguay without the hindrance of other members of Mercosur. This could possibly cause some turmoil in the South American and Latin American region. Also, it is interesting to notice the entrance of China into a capitalistic-based free trade organization. China, in historical context, has been a fiercely communistic country, and has not engaged in capitalistic economic activity. However, in recent years, China has been increasing its capitalistic activity, hence, it is entering free trade talks with South American countries. This article is critical to international economics because China is one of the largest economic powerhouses in the world, and they’re attempting to expand their trade network.
In relation to Unit 1, China is one of the largest players in the global arena. Uruguay, and other members of Mercosur (as well as China) are recognized countries, and have sovereignty, however, they have nowhere near the level of influence that China possesses. Additionally, Mercosur is an IGO. Mercosur appears to be an economic IGO, as they wish to be involved with free-trade talks with China.