URUGUAY

Relations between Uruguay and the two largest economies in Mercosur, Argentina and Brazil, have markedly deteriorated in recent weeks, following new restrictions to inter-regional trade that could hurt Uruguay's export sector. President José Mujica threatened to reconsider the country's links with Mercosur, and negotiations with Brazil on trade barriers started in late September. Although it is too early to determine what the outcome of these talks could be, we underline that a further deterioration in Uruguay's relations with its Mercosur partners represents a significant risk of economic and political isolation for the

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