Politics, Business & Culture in the Americas

[i]No voy en tren: Uruguay y las perspectivas de un TLC con Estados Unidos (2000–2010)[/i] by Roberto Porzecanski

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In the first decade of the 2000s, Uruguay unsuccessfully tried to sign a bilateral free-trade agreement (FTA) with the United States. These efforts were pursued first by the administration of President Jorge Batlle (2000–2005) of the center-right Partido Colorado and then by President Tabaré Vázquez (2005–2010) of the center-left Frente Amplio coalition. Many observers believed the drive to enact a U.S.–Uruguay FTA reflected Uruguay’s dissatisfaction with the structure and benefits of the regional trading bloc Mercado Común del Sur (MERCOSUR), which many Uruguayans believe never lived up to expectations. It also demonstrated Uruguay’s willingness to defy regional powerhouses Argentina and Brazil—MERCOSUR’s two biggest partners—which both opposed unilateral Uruguayan efforts to negotiate with the United States.

But why didn’t the two parties succeed in getting an agreement that fit Uruguay’s needs and was seemingly aligned with U.S. trade policy?

In No voy en tren: Uruguay y las perspectivas de un TLC con Estados Unidos (2000–2010) (I’m Not Getting on the Train: Uruguay and the Prospects for a Free Trade Agreement with the United States, 2000–2010), Roberto Porzecanski artfully addresses this question. Porzecanski, a Uruguayan Fulbright scholar and a consultant for McKinsey & Co., uses his extensive background in political science to describe—with remarkable clarity—the behind-the-scenes story of the policies, negotiations and political economy calculations that drove nearly a decade of failed Uruguayan efforts to sign an FTA with the United States.

Porzecanski provides a perspective on many issues that led to the ultimate failure of negotiations, ranging from lack of support from the presidents’ own political coalitions to the inability of either administration to build a nationwide consensus that an FTA was in Uruguay’s best interests. He also raises factors not widely discussed elsewhere, such as the Uruguayan government’s inability to predict the reactions of Brazil and Argentina—both keen to prevent the FTA. Pointedly, the book quotes one particularly strong statement from Argentine Foreign Minister Jorge Taiana (2005–2010): “It is impossible for a MERCOSUR member to individually negotiate a trade agreement unless they intend to leave the bloc.”

Nevertheless, as Porzecanski explains, Uruguay risked the alienation of domestic groups and regional allies for several reasons. President Batlle, a free-trade believer, wanted an FTA to open new markets and find alternatives to MERCOSUR, a bloc that he initially supported before becoming skeptical.

President Vázquez and his economy minister, Danilo Astori, wanted to raise the country’s international profile, hoping that MERCOSUR would be flexible enough to allow a unilateral trade strategy. Vázquez was also thinking about his re-election prospects, and Astori was considering a possible future presidential run. Both men believed the conclusion of an FTA would win them significant political support at home—but they were wrong. In the end, former agriculture minister and current President José Mujica—a skeptic of the FTA at the time—defeated Astori in the Frente Amplio primary election in June 2009. Astori, now the vice president, later agreed to be his running mate.

Although not part of Porzecanksi’s focus, a deeper analysis of the U.S. perspective would have helped readers understand the larger context. Still, the book is a solid work. The first two chapters focus on basic concepts of FTA negotiations and U.S. trade liberalization strategy toward Latin America, which are presented in a concise manner and always in the context of Uruguayan politics.

Porzecanski begins with the regional integration challenges of MERCOSUR that the Batlle administration faced. In particular, he notes, the 2001–2002 financial crisis complicated bilateral relations between Argentina and Uruguay. Also, the 2001 Summit of the Americas in Québec City, along with the U.S.-led push for a Free Trade Area of the Americas (FTAA), added new pressures to the trading bloc. In that environment, the book explains how the Batlle administration embarked on a bilateral trade negotiation strategy that ended with the signing of a bilateral investment treaty (BIT) during the final months of his presidency in October 2004. The BIT was ratified in December 2005 during President Vázquez’ presidency.

The chapters where Porzecanski shows the internal dynamics and struggles of President Vázquez’ government constitute the core of the book. They provide an impressive amount of detail supported by interviews and solid theoretical architecture. Internal disagreements dominated the Vázquez administration: the ministers of economy and industry strongly backed the FTA, while the then-minister of foreign affairs, Reinaldo Gargano, was against it. “An FTA will not be signed, don’t worry,” Gargano said in a public statement contradicting the president.

No voy en tren also explores Vázquez’ struggles with businesses, academics, the media, and opposition politicians—many of whom opposed the agreement. Although there were some business leaders who argued that an agreement with “Uruguay’s most important trading partner” was crucial, others—especially academics—advocated for “more and better MERCOSUR” instead.

Of special interest to readers is the detailed and vivid description of how Vázquez and Astori tried to develop a uniquely Uruguayan model for an FTA with Washington, once they realized the U.S.–Peru agreement was unpopular with the governing coalition. They believed—erroneously it turned out—that they could negotiate special concessions from the George W. Bush administration for a “Uruguayan Way,” since Washington seemed to be favorable to striking a deal.

However, data and wide-ranging field research in the book show that an FTA at the time would have been “going against the current” of a Uruguayan political system that was largely committed to MERCOSUR.

The failure of the FTA led to the signing of a Trade and Investment Framework Agreement (TIFA) with the U.S. in January 2007. This was a second-best solution that left open the door for future, more comprehensive negotiations. But as the book makes clear, the TIFA also encountered strong resistance inside and outside the government. So is an FTA off the table? The author convincingly argues that it is, but points out that President José Mujica—once a detractor—now appears to acknowledge some benefits of the TIFA.

This book fills a decade-long void of analysis of the Uruguayan case, and is an important piece of scholarship in its own right. President Vázquez, by trying to convince Uruguayans about the urgency of the FTA, once said, “The train, sometimes, only comes once.”

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Tags: Free Trade, Uruguay
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