The Southern Cone Common Market (MERCOSUR), consisting of Argentina, Brazil, Paraguay and Uruguay, continues to strengthen trade and commerce ties between the four member nations of the block. According to Datamyne Trade Sources, in a recently released report, there remains a considerable level of unequal trade among the four nations.  While looking at Datamyne charts, it is clear that Argentina’s eight largest import trading partners in 2011 were: Brazil with over USD 18.4 billion, China with USD 9.6 billion, and the United States with USD 6.9 Billion.  Germany is in fourth place, with over USD 2.9 billion.  Commerce with Europe and Mexico is at the level of USD 2.3 billion.  The remaining four countries:  Italy, Trinidad and Tobago, Spain, and Uruguay each enjoy relatively the same amount of trade with Argentina, which varies from USD 1.3 billion to USD 1.1 billion respectively.

Glancing at a recent Datamyne report, one can immediately see that Paraguay is the only MERCOSUR country that is not included among Argentina’s top ten import trade partners. Overall MERCOSUR products cover only 32% of the total share of  its imports; China is preferred over the United States, at 15% and 11% respectively.

Argentina’s most-imported products are:  petroleum and natural gas, agglomerated iron ores, medicine, transportation equipment, electrical energy, apparel, information technology etc. Of the country’s export trade, 29% is focused on the MERCOSUR bloc, but again, Paraguay as a member of this trading block is not on the list of Argentina’s top ten export partners. From the numbers can be deduced that Argentina and Brazil have a very balanced trade relationship, while Argentina exports over USD 18 billion dollars to Brazil, while Brazil exports to Argentina over USD 18.4 billion of products. The other largest exporting partners of Argentina are:  China, Chile, U.S., Spain, Netherlands, Germany, Uruguay, and Italy. The country’s export potential is focused on soybean oil, corn, diesel trucks,  wheat, crude oil, chemicals and natural gas products and residuals.  

Looking at Brazil, the country has a slightly different trade balance between three continents, with U.S. as the largest import trading partner (USD 33.9 billion), trailed by China (USD 32.7 billion), Argentina (USD 16.9 billion), Germany with USD 15.2 billion, followed by South Korea and Nigeria with almost 10.1 and 8.3 billion dollars respectively, and the remaining nations are Japan, Italy, India and France. Contrary to Argentina, Brazil is strengthening even more its ties with the Far East and particularly with the African nation of Nigeria by taking into account the formers’ resources and reaches in crude oil. The largest share of Brazilian exports is in the area of MERCOSUR with 59 % of the total exported products. 

The country’s top ten export trade partners are: China (USD 44.3 billion), United States (USD 25.8 billion), Argentina (USD 22.7 billion), Netherlands (USD 13.6 billion), Japan and Germany with almost the same trade volume of USD 9.4 billion and 9.03 billion respectively. The last four are Italy, Chile and the United Kingdom – each with just about the same amount of trade - and South Korea being the tenth of Brazil’s top export trade partners.  Brazil exports are iron ore, crude oil, soybeans, cane sugar in raw and solid form, agglomerated iron ores, non-roasted coffee, soybean oil cake, chemical wood pulp, processed chicken cuts and food products. 

Paraguay’s top import trade partner countries are the same as Argentina’s, with the exception of Venezuela and South Korea, and of course their rankings are slightly different:  China is in first place with over USD 3.6 billion, trailed by Brazil with over USD 3.2 billion and Argentina with over USD 1.7 billion, trailed by a dramatic decrease in trade from by U.S. with USD 668 million, Japan and Venezuela with over USD 395 Million and USD 390 Million, respectively. The last three import trading partners are South Korea, Uruguay and Mexico.  Even though Argentina and Brazil do not have Paraguay on their trade radar, the latter continues to place an emphasis on the MERCOSUR trading partners by giving them 42% of the total import trade share for 2011.
Paraguay mostly imports petroleum, phones for cellular networks, household electric appliances, trucks, radio broadcast receivers, video games, and light oils. 

Paraguay has a well diversified list of top export trade partners, focusing primarily and allocating 59% of its export trade relations to the three other countries of MERCOSUR, Argentina (USD 2.1 billion), Uruguay (over USD 1 billion), Brazil (USD 810 million),  followed by Chile (USD 493 Million), Switzerland (USD 291 Million), the Russian Federation (USD 224 Million), trailed by the United States (USD 151 Million),  While the last three are: Italy (USD 115 million), Peru (USD 114 million) and Israel (USD 104 million).  For the first and only time, the Russian Federation appears to be sixth largest export trading partner with a MERCOSUR member country, buying more goods from Paraguay than the United States, with a difference of over USD 72 million.  Another trend of Paraguayan exports is that Peru and Israel merge as two of the ten large export trade partners with Paraguay.

Paraguay – a nation located in the heart of South America - has focused most of its export trade towards the Western Hemisphere (59%), and only 39 % of its products are exported in the rest of the world, including China with a little over 1 %.   Paraguay’s most exported products are soybeans, soybean oilcake, corn, meat and beef cattle, wheat, cane sugar, and sesame seeds.  Indeed, Paraguay is the largest producer of sesame seed in the world.

Uruguay is the smallest economy in MERCOSUR and unfortunately participates in the involuntary discrimination - applied by its two largest trade partners through MERCOSUR and neighbors – regarding the exporting and importing of goods from Paraguay.  The latter is not among Uruguay’s ten largest import trade partners due to a different strategy of diversification that Montevideo has pursued during 2011.  The country’s import emphasis over the past year has shifted to South Africa and Angola; Russia is the sixth largest partner in imports (USD 469 Million) and also the Far East, with China occupying third place (over USD 1.2 billion).  Brazil and Argentina occupy the top of the list with almost the same amount of goods exported from both countries (USD 1.75 billion and 1.6 billion respectively).  Venezuela is in fourth place with USD 811 Million, the U.S. is in the fifth place at USD 636 million.  The last four countries are: South Africa (USD 362 Million), Germany (USD 238 Million), Mexico (USD 228 Million), and Angola (USD 212 Million).  Only 36 % of imported products and goods originate from the MERCOSUR countries, and from US are shipped 7 % of imported products. The rest is imported by China (13%) and from the rest of the world (44%).   The most imported products are:  crude oil, telecommunications technology, urea, static converters, anti-sprout herbicide, and medicinal products. Over USD 550 million worth of goods in Uruguay come from Africa (South Africa and Angola).

While Uruguay’s top export trade partners were almost the same as its top ten import trade partners, there are some changes taking place.  Contrary to the other two members of MERCOSUR, Paraguay is on its list as the ninth largest export trade partner with over USD 191 Million.  Undoubtedly there is the traditional trio of great export trading partners in the MERCOSUR, and those are Brazil (USD 1.62 billion), trailed by China  (USD 664 Million), Argentina is in the third place (USD 558 Million), Russia (USD 395 Million), Venezuela (326 Million), Germany and Spain are the only two European Countries acquiring goods from Uruguay with USD 303 Million and USD 202 Million respectively, the United States is in seventh place, and Mexico is the tenth largest trading partner (USD 162 Million).

Uruguay’s top exported products are mainly in the dairy and agricultural industry including:  meat and beef cattle, soybeans, wheat, non-coniferous wood, milk, malt, cheese, and wool tops and combed wool.

Although Uruguay generally exports the same products as Paraguay, both countries – belonging to the same regional trade alliance - have more balanced trade relations than both Argentina and Brazil respectively have with Paraguay alone.

Perhaps the land-locked country should focus on establishing a more diversified foreign trade practice in order to include Central American countries, a few more countries from Western Europe and use Israel a bridging point to expand its presence in the Middle East and Northern Africa,while  simultaneously the government should have expanded its trade relations with Bolivia, Japan and Canada.

Spero analyst Peter Tase analyzes diplomacy and international trade. See his website PeterTase.



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