URUGUAY: PRESIDENT TABARE VAZQUEZ TAKES STEP BACK FROM FREE TRADE TREATY WITH THE U.S.

Uruguay's President Tabare Vazquez announced on Sept. 28 that his government would not negotiate a "fast-track" free-trade agreement (FTA) with the US, opting instead to set up a significantly less ambitious agreement in the short term. The step back from fast-track negotiation was a minor victory for groups within Uruguay, the leftist factions in Vazquez's government, and the regional governments that had been pressuring against an Uruguay-US FTA, although the president says his administration could still seek to set one up in the future.

More-flexible, less-ambitious agreement to be sought

President Vazquez had been stepping up efforts to work out an FTA with the US even as various trade-union groups stepped up their opposition to such a deal. The Uruguayan government, frustrated with its role in the Southern Cone Common Market (MERCOSUR), has looked to the wealthier export market of the US and other countries like China and India as alternatives (see NotiSur, 2006-09-22).

But Vazquez called his ministers together on Sept. 28 to tell them that he would not sign an FTA and would instead seek a Trade and Investment Framework Agreement (TIFA). "I want to give you an important piece of news," said Vazquez, according to Uruguayan daily newspaper El Pais. "In the last few days it has been necessary to make decisions, and I assume all the responsibility. Uruguay will sign neither the fast track nor an FTA with the US."

The TIFA is more flexible than an FTA would be and covers only a subset of national production, with products like meat, rice, dairy, citrus, and software--products that Economy Minister Danilo Astori called "classic" Uruguayan products.

Officials from the office of the US Trade Representative (USTR) came to Montevideo in the first week of October to begin negotiations on the TIFA.

Vazquez said, "It is not the most convenient" decision to slow FTA talks. But he said of the US proposal to move them forward through fast-track discussions, "We consider that this FTA did not permit us time to analyze the different issues to arrive at an agreement." He said the government would "create a high-level commission that would explore the agreements that can be reached."

The fast-track process is one that Peru followed to make a bilateral deal with the US (see NotiSur, 2006-01-13 and 2006-07-21).

"This path that Uruguay has proposed, a Uruguayan path, is a path that it seems to us is adapted to our characteristics: gradual, serious, strong...

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