Milei evaluates Argentina’s future in Mercosur

President Javier Milei is evaluating Argentina’s future relationship with Mercosur and at next week’s summit in Montevideo, will propose a flexibilisation of the trade bloc’s rules.

Milei will propose the elimination of existing rules that do not allow free-trade agreements to be negotiated with third parties without the prior approval of Mercosur members  – a longstanding desire of Uruguay President Luis Lacalle Pou

Government sources refuse to not rule out the possibility of breaking with the bloc if they are not listened to.

The Milei administration considers that “Mercosur does not function as it was created to” and believes that “under these [existing] conditions, it is no good for Argentina” to be part of it, said the sources.

The La Libertad Avanza government’s preference is to be able to draw up bilateral free-trade agreements without the need to request permission from the rest of the member countries beforehand. Officials even fantasise about establishing a common free-trade market that is “not just for industrialists in São Paulo.” 

“The idea is to draw up free-trade agreements between the countries that make up the bloc and with the world,” a top government source told the Noticias Argentinas news agency. 

Officials are keen to clarify that plan A is not to leave the customs union, though such an eventuality is not ruled out if Argentina’s requests are not met. The current state of affairs is considered to be a limitation for the normal economic development of the countries.

In addition to Argentina, Mercosur also includes Brazil, Paraguay, Uruguay and most recently Bolivia. Venezuela was suspended from the bloc in 2016. Chile, Colombia, Ecuador, Guyana, Peru and Suriname are associated states. 

The political hues of the region’s current government do not encourage optimism in the La Libertad Avanza government, which lacks major allies to support the proposal. Paraguay is a potential supporter, though the longstanding position of Uruguay may change given the election of Yamandú Orsi. 

President Milei will present his proposal on December 6 in Montevideo at the upcoming Mercosur Leaders Summit. 

His presidential spokesman, Manuel Adorni, anticipated this week the government will insist on closing the long-stalled agreement between the European Union and the Latin American bloc, which today is in danger due to pushback from France and Poland.

“We will always be in agreement with everything related to trade agreements. Whether it is the European Union-Mercosur [deal] or a free-trade agreement with the United States,” said the official. “We are going to promote it within the difficulties that Mercosur has with its structure and regulations.”