(Bloomberg) -- Argentine President Javier Milei said he would leave Mercosur if necessary to cement a free trade agreement with the US, although he hopes to reach a deal without needing to take such drastic action.
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Asked by Bloomberg News Editor-in-Chief John Micklethwait if he would exit the South American customs union, Milei paused before saying yes, if such an extreme move were necessary.
“But there are mechanisms that can be used even within Mercosur, so we think it can be done without necessarily having to leave,” he said in an interview at the World Economic Forum in Davos.
The libertarian Argentine leader also said he plans to tap capital markets after he lifts the country’s web of currency controls, although he did not provide a specific timeline. Milei highlighted his team’s commitment to sticking to their zero-deficit goal when asked about the return to international bond markets.
Economy Minister Luis Caputo previously told investors in New York that the goal was to tap money managers by 2026, when the hope is to also lift capital controls.
On trade, Milei demurred on whether he had discussed a potential agreement with Donald Trump or members of his administration while in Washington for the new US leader’s inauguration. But, he said, his government has been “working very hard” on a deal with the US.
Mercosur, the bloc originally formed by Argentina, Brazil, Uruguay and Paraguay, represents a major potential hurdle to such an agreement. The bloc has in the past pushed back against its members negotiating individual agreements, as it did when Uruguay sought to join one of Asia’s biggest trading pacts in 2022.
Milei has been a fierce critic of Mercosur, which he has called a protectionist “prison.” But so far, he has not followed through on campaign threats to pull Argentina out of the bloc, and last year he joined calls for quick approval of a major trade deal with the EU that was inked in December.
At least one member has already expressed some doubts: Paraguay President Santiago Peña pushed back against a possible bilateral US-Argentina agreement in an interview last week, even as he conceded that Mercosur needs reforms.
Leaving Mercosur would be difficult for Argentina given its economic integration with neighboring Brazil, its largest trading partner.