Mercosur-China trade talks must address imbalance, Paraguay says

South American trade bloc Mercosur would be willing to negotiate a trade agreement with China if it addresses the lopsided commerce between the two trading partners, Paraguay Foreign Minister Ruben Ramirez said in an interview.

Trade in Chinese manufactured goods and Mercosur farm commodities leads to a hefty trade deficit in the case of Paraguay, Ramirez said.

“None of the Mercosur countries have the capacity to export value-added products to that market. On the contrary, we export raw materials and import finished goods” from China, Ramirez said at his country’s embassy in Washington.

Diplomats from Mercosur’s founding nations Argentina, Brazil, Paraguay and Uruguay discussed trade and investment with a Chinese delegation led by Deputy Foreign Minister Hua Chunying in Montevideo last month. China pledged to submit a road map for strengthening ties with Mercosur later this year.

Neither side has proposed a timeframe for talks or specific trade items to be discussed, Ramirez said. Paraguay—one of the few countries in Latin America that still has diplomatic ties with Taiwan—won’t sacrifice its relationship with Taipei as a condition for Mercosur to pursue a trade deal with China, he said.

Mercosur has struggled to clinch trade deals with major countries or blocs. A proposed free trade agreement with the European Union remains in limbo after decades of negotiations with the EU demanding Mercosur agree to more stringent environmental goals. Uruguay’s attempt to cut a bilateral trade deal with China in defiance of Mercosur rules foundered amid opposition from Argentina and Brazil.

The administration of President Santiago Pena is backing Ramirez’s candidacy to lead the Organization of American States at a time when international criminal groups challenge governments across the region. Former Uruguay foreign minister Luis Almagro has served as OAS secretary general since 2015. 

Ramirez wants to modernize the OAS by creating programs tailored to the needs of each country and region in the Americas, especially in the area of security. 

“The security challenges of Caribbean countries aren’t the same as South American countries or North America. We must find aspects that are common to the hemisphere and those that are specific to each country and region,” he said.