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Uruguay Economic Integration
Economic integration with other Latin American nations
was an
important goal for Uruguay because of its small internal
market.
The idea of integration was enshrined in the nation's
constitution, which stated that "the Republic will seek to
achieve social and economic integration of the Latin
American
nations, especially to provide for a common defense of
products
and raw materials."
Sanguinetti played an important mediating role in the
early
discussions of integration between Argentina and Brazil, a
delicate process because of the traditional rivalry
between the
two larger nations
(see Foreign Relations under Democratic Rule, 1985-90
, ch. 4). Presidents Raúl Alfonsín of Argentina,
José
Sarney Costa of Brazil, and Sanguinetti held five
trilateral
meetings between 1986 and 1988, during which they signed
several
tariff-reduction agreements and discussed a long-term
framework
for regional economic integration.
The Uruguayan government predicted that the lower trade
barriers would allow Uruguayan exports to Brazil and
Argentina to
increase by 80 to 90 percent by 1991. In practice,
however,
Uruguay's trade with its larger neighbors seemed to be
affected
more by exchange rates than by tariff and quota
agreements. For
example, Uruguay already had bilateral trade agreements
with both
Brazil and Argentina during the late 1980s, but in early
1990
exports to Argentina covered by the agreement actually
declined.
In contrast, exports to Brazil increased markedly during
the
first half of 1990 after the Brazilian government
tightened
liquidity and caused the Brazilian cruzeiro to appreciate.
Despite such early evidence that the trade agreements
were
having only a limited effect on regional commerce, Lacalle
indicated in early 1990 that he expected Uruguay to
continue to
play a pivotal role in regional integration. He indicated
further
that he hoped the integration would be extended to include
Paraguay and Bolivia. "We will try to open the Atlantic
balcony
to [those] inland countries," he said, "improving the
operation
of our ports, promoting the use of the Paraná-Paraguay
waterway,
and establishing free-trade zones near the ports for the
manufacture of products from the South American
'hinterland'."
Lacalle also said he proposed to President Andrés
Rodríguez
Pedotti of Paraguay the formation of a trinational fleet
of
merchant vessels to carry Uruguayan, Paraguayan, and
Bolivian
products to markets in North America, Europe, and Asia.
Thus, Lacalle envisioned Uruguay not only as a
participant in
trade agreements with its larger neighbors but also as a
close
partner with the smaller and apparently more stable
economies of
the region. A noteworthy aspect of Lacalle's plan was its
stress
on the development of the regional infrastructure. Lack of
such
an infrastructure--there was no railroad bridge between
Uruguay
and Argentina, for example, until the Salto Grande Dam
opened in
1982--remained a serious impediment to regional
integration.
Data as of December 1990
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